Sugar industry worried as ethanol allocation tilts towards grain
India’s sugar industry, once buoyed by the ethanol blending programme, now faces a policy hurdle. Ethanol from sugarcane, once 70% of supply, has dropped to 30%, as grain-based distilleries gain preference. Industry leaders warn this shift threatens revenues, debt servicing, and long-term viability. They urge restoration of the original 55% ethanol share from sugar to ensure sustainability.
The ethanol blending programme, which turned the fortunes of the sugar industry, has hit a policy block for the industry. In the past couple of years, the industry has made immense investments in setting up new ethanol generation capacities and augmenting supplies, considering the growing demand for ethanol needed for the programme, might soon find no takers for the same.
According to the sugar industry, the feedstock mix between molasses and grains has become skewed against the former. The sugar industry at one point in time was supplying around 70% ethanol, which has fallen to about 30% now, and the gap has been filled by grain-based distilleries. This unfavourable development has multiple adverse impacts on the sugar industry in terms of revenue generation from ethanol, timely farmer payment and optimum capacity utilisation.
Atul Chaturvedi, Executive Chairman of Shree Renuka Sugars, said that the Niti Aayog had envisaged 55% ethanol from the sugar sector and 45% from grain. “Based on this understanding, the sugar sector invested heavily in ethanol infrastructure purely on the Government’s promise”.
Chaturvedi fears that with limited ethanol allocations to the sector, it would be difficult to service interest on the debt and would again be driven to sickness. “We hope the Government sees the writing on the wall and brings the original balance back. With a good sugarcane crop expected this year, it should give the required confidence to the Government to increase allocation to the sugar sector to 55% of requirement”, he said.
Ankita Patil, Whole-time Director, Indreshwar Sugar Mills Limited, said that Ethanol has been a key margin stabiliser for the sugar mills. She said that if this trend continues, the sugar industry risks becoming over reliant on sugar alone, losing the diversification and economic edge that ethanol once provided.
She further added that this will make the industry more vulnerable, molasses prices will decline, and ethanol revenue will be sharply reduced.
“Global prices will fluctuate, and infrastructure will be under utilised. Strategic planning and policy alignment will be essential for long-term sustainability of the sugar industry”, she concluded.
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Source : Chinimandi
