Sugar industry for direct manufacture of ethanol

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Sugar mills have urged the government to allow direct manufacturing of ethanol from cane. A practice prevalent globally, to reduce fuel needs, it is currently banned in India due to the fear of massive cane diversion to it, resulting in lower sugar output. Brazil, for example, meets 37 per cent of its annual fuel requirement through ethanol.

The US has moved towards 20 per cent blending of the green fuel with petrol. Currently, ethanol is produced in India as a byproduct of sugar manufacturing. Direct manufacturing of ethanol from cane does not yield any sugar output. As of now, India has surplus sugar of 8.8 million tonnes, set to rise to 10.3 mt by the end of the 2013-14 season.

This will be the second highest sugar inventory India ever had, the largest being 11 mt in 2007-08.

“Hence, we urge the government to allow direct manufacturing of ethanol from cane,” said Abinash Verma, director-general of Indian Sugar Mills Association (Isma).

With the record high carryover stocks, the government introduced several rescue measures for protecting sugar industry in 2007-08. In addition to introducing a five mt mandatory buffer stock, it allowed export incentives on six mt and also an interest subvention on a working capital loan of Rs 3,500 crore for four years. Sugar prices declined by Rs 4-5 a kg to Rs 12-13 a kg in that year. The industry also saw the highest cane payment arrears, at Rs 16,000 crore.

The industry anticipates a similar situation this year. With mounting cane arrears of Rs 127,00 crore this March and sugar prices falling by Rs 5-7 a kg this sugar year (October 2012–September 2013), the government might be asked to again rescue the industry, with similar measures.

With an estimated 1.5 mt of surplus sugar output in the ensuing crushing season, India will have the highest ever carryover stock, of 10.3 mt in 2013-14. Isma has forecast the sugar output at 25 mt in  crushing season 2013-14. India’s annual sugar consumption is estimated at 23.5 mt.

At an average of Rs 29.5-31 a kg, the sugar industry estimated yield losses of Rs 3-4 a kg in this season. the price has since fallen further.

There is an urgent need to bring the inventory level to four mt, for which the government should procure two to three mt for a strategic reserve for supply through the Public Distribution System, said an industry official. The government should also raise import duty on white sugar to 40 per cent from the existing 15 per cent to restrict the sweetener’s supply into India from Pakistan, he added.