Ethanol units plan to start operations in Oct following govt relaxation

SugarcaneEncouraged by the government’s decision to allow the production of ethanol directly from sugarcane, independent distilleries are planning to commence operations in October this year.

In the past years, distilleries attached to sugar mills used to start operations four-six weeks after the commencement of cane crushing at sugar factories.
To avoid a further sugar glut and ensure farmers’ timely payment for cane supplies, the government early this year permitted factories to set up independent distilleries for producing ethanol directly from sugarcane. The decision assumes significance in the wake of bumper cane output this year, the second year in a row. 
After a record 32.25 million tonnes of sugar output for the season 2017-18, the Indian Sugar Mills Association (ISMA) forecast India’s sugar output to set a new record even at 35.5 million tonnes for the season beginning October 2018 (season 2018-19).
Against this, India’s annual sugar consumption is estimated at 25.5 million tonnes.
“We estimate around 250 million litres of ethanol production capacity to be added this year to the existing installed capacity of 2,750 million litres from both greenfield and brownfield projects. A major chunk of them are set to commence production by October,” said Abinash Verma, Director General, ISMA.

ALSO READ: Govt allows mills to make ethanol directly from sugarcane juice, B-molasses
Prime Minister Narendra Modi has announced savings of Rs40 billion of foreign currency reserves for 2017-18 through ethanol blending with petrol. 
The ISMA in June estimated sugarcane acreage to be higher by 8 per cent at around 5.43 million hectares for 2018-19 as compared to 5.04 million hectares in 2017-18. 

ALSO READ: GoM not in favour of sugar cess, moots lowering of GST on ethanol to 12%

The new ethanol capacity would not only consume a substantial quantity of excess sugarcane but also help encourage the ethanol-blending programme. Owing to a lack of adequate supply, the government has so far failed to achieve 5 per cent of mandatory ethanol blending with petrol target set four years ago.

Industry sources have estimated the government has achieved the target of 1,130 million litres of ethanol blending with petrol for 2017-18, 71 per cent higher than the previous year.

Meanwhile, the government has announced interest subvention for both greenfield and brownfield ethanol projects. For this the Ministry of Food and Consumer Affairs amended guidelines on August 9 for easy accommodation of interested investors.

“In the guidelines issued in July, certain sections were left out and we brought this to the notice of the government. The amended guidelines, however, will attract a huge interest of investors towards ethanol production,” said a senior industry official with an interest in distilleries.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel