Thanks to duty hike, sugar mills see higher demand for molasses

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03 February 2021, New Delhi, IN: Sugar industry stands to benefit from the Budget proposal to increase import duty on denatured ethyl alcohol to 5 per cent from the current 2.5 per cent as it would make imported ethyl alcohol costlier by ₹1 per litre at the current global prices, the Indian Sugar Mills Association (ISMA) said on Tuesday.

Also Read: Union Budget 2021-22 does not offer anything for Agrochemical Sector: PMFAI

This, in turn, will increase the demand for domestic molasses and alcohol , the sugar industry body said responding to the budgetary proposal.

In 2019-20, India imported 50 crore litres of denatured ethyl alcohol, which is used mainly in chemical industry, according to data available with the Commerce Ministry. During April-November period of 2020-21, India imported a little over 40 crore litres of the denatured ethyl alcohol, indicating a higher demand.

This is in addition to over 300 crore litres of ethyl alcohol produced by the sugar industry. Of this, 100-110 crore litres are used for making spirit, while the rest is denatured and used either as feedstock for chemical industry (40-45 crore litres) or for blending with petrol.

ISMA also welcomed the proposed budgetary allocation of ₹4,337 crore for sugar industry, which is ₹2,895 crore higher than that in the previous budget estimates.

The revised estimates, however, increased the 2020-21 allocation further to ₹5,376 crore. “Almost all these payments are to be made to the sugarcane farmers and therefore will directly reduce the cane price arrears and benefit the farmer community directly,” ISMA said.

Green focus

The sugar industry body also hoped that the Budget’s focus on renewable energy and clean air would give further boost to the ethanol production from sugarcane and surplus grains/maize, because ethanol-blended petrol reduces vehicular pollution and directly improves air quality.

The Budget also provided for ₹300 crore as against ₹150 crore in the 2020-21 revised estimates for extending financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity.

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