Sugar mills have contracted 104 crore litres of ethanol so far: ISMA

Sugar industry has contracted 104 crore litres of ethanol supplies so far in this fiscal, which is expected to save the government almost Rs 5,000 crore of foreign exchange, industry body ISMA said today.

Welcoming the steps taken by the Centre to help the industry come out of distress, ISMA said states that are not permitting production of ethanol or delaying excise exemption or creating impediments on inter-state movements by imposing taxes and duties, should be convinced to remove these impediments.

"The industry has responded well by contracting for 104 crore litres of ethanol supplies (against 78 crore litres in 2014-15), which will straightaway save the government almost Rs 5,000 crore of foreign exchange," Indian Sugar Mills Association (ISMA) A Vellayan said in a statement.

The industry expects to contract for more ethanol supplies in the next couple of months for the upcoming season, as and when tenders are floated by oil marketing companies, he added.

He also said that removal of excise duty on ethanol has given higher returns to mills/suppliers of around Rs 5 per litre. In April this year the Centre had removed the excise duty on ethanol.

At the same time the decision to move to 10 per cent ethanol blending with petrol which has increased the demand for fuel ethanol to 266 crore litres.

Acknowledging the government's decision to provide production subsidy of Rs 4.50 per quintal of sugarcane crushed during 2015-16 sugar season, amounting to a total of Rs. 1147 crore, ISMA President said: "This shows Government's commitments towards both the sugar industry and the farmers at large."

ISMA also reiterated their demand to accept the recommendations of the Commission on Agricultural Costs and Prices (CACP) for a revenue sharing or a cane price-sugar price linkage formula along with the Price Stabilization Fund to bridge the gap between FRP and what the industry can pay.

To liquidate surplus sugar stocks, the government has made it mandatory to millers to export 4 million tonnes in the current season.

Industry is responding in the best possible manner by trying to export sugar, even though exports are unviable and the mills are losing money, he added.

India, the world's second largest sugar producer, is all set to produce surplus sweetener for the sixth straight year at 26-27 million tonnes in 2015-16.