New Delhi: Sugar industry body Indian Sugar Mills Association (ISMA) demanded on Wednesday that the government should come out with a long-term policy and formula for ethanol pricing in order to encourage mills to expand capacity by around 400 crore litre which will require an estimated investment of Rs 17,500 crore.
Briefing media about the demand-supply scenario of sugar for the 2023-24 marketing year starting next month, ISMA President Aditya Jhunjhunwala also demanded that the minimum selling price of sugar should be enhanced to Rs 38 per kg from the current Rs 31 per kg in view of an increase in production cost.
He said the ISMA will come out with a fresh sugar production estimate for the 2023-24 marketing year (October-September) during November after analysing the satellite image of sugarcane area across major producing states and then only would be able to assess whether there is any surplus for exports after meeting the domestic demand of sugar and ethanol.
"At present, the sugar industry has an installed capacity of 700 crore litre for ethanol production and we operate at 80 percent capacity utilisation. We need to increase our installed capacity to 1,000-1,100 crore litre. This will require an estimated investment of Rs 17,500 crore," Jhunjhunwala told reporters here. To facilitate this huge investment and a healthy return on it, he said, "we need to have a long term ethanol pricing policy."
Jhunjhunwala said the government should devise some formula for fixation of ethanol price for blending with petrol.
He said the price of ethanol produced from sugarcane juice/syrup should be raised to Rs 69.85 per litre from about Rs 65 per litre now as the fair and remunerative price (FRP) of sugarcane has been increased by the government. FRP is the minimum price which mills have to pay to farmers for sugarcane purchase.
The ISMA president said that the ethanol blending has reached 11.76 percent for the current ethanol supply year (December-November) as against the target of 12 percent. The government aims to achieve 20 percent ethanol blending with petrol by 2025.
In the current ethanol supply year, sugar mills would supply around 450 crore litre of ethanol to oil marketing companies (OMCs). Another 100 crore litre was supplied to alcohol and other industries.
Jhunjhunwala said the sugar industry needs to supply at least 800 crore litres of ethanol to boost the blending programme. On demand-supply for sugar, the ISMA president asserted there is no shortage of sugar in the current 2022-23 marketing year, ending this month, and there would be no scarcity next marketing year.
In the next 2023-24 marketing year, ISMA has projected a sugar production estimate of 317 lakh tonnes after the diversion of 45 lakh tonnes for ethanol. The domestic demand is seen at 280 lakh tonnes. The opening stock will be around 55 lakh tonnes.
The production for the current marketing year is 328 lakh tonnes after the diversion of 42 lakh tonnes for ethanol. In 2022-23, the industry also exported 61 lakh tonnes of sugar, the entire quantity permitted by the food ministry.
Asked about export surplus for 2023-24, Jhunjhunwala said the industry would assess the production estimate in October-November to know about surplus sweetener for outward shipments.
