Policy

Higher Sugar export will put pressure on prices ISMA

Union Transport Minister Nitin Gadkari urged the sugar industry to ramp up ethanol production as demand for it is likely to go up once flexi-fuel vehicles are introduced in India
Higher Sugar export will put pressure on prices ISMA

India is expected to start the 2016-17 marketing year with 6.7 million tonnes of sugar, 26.4 percent lower than at the beginning of the current year, as rising exports will pull down inventories in the world’s second biggest producer, the sugar industry body said on Wednesday.

"We can certainly export 1.0 million to 1.2 million tonnes of white sugar … We can also export up to 2 million tonnes of raw sugar," A Vellayan, president of the Indian Sugar Mills Association (ISMA) said.

According to ISMA, the higher Indian exports will put pressure on global prices , but harden the local market and help mills pay farmers at the support levels set by the state for sugar cane. India started the 2015-16 year on Oct. 1 with 9.1 million tonnes.

The higher Indian exports will put pressure on global prices , but harden the local market and help mills pay farmers at the support levels set by the state for sugar cane. India started the 2015/16 year on Oct. 1 with 9.1 million tonnes of sugar stocks carried forward from the earlier year.

India has been pushing domestic mills to sell sugar on the international market and use the proceeds to clear huge debts they owe farmers for sugarcane. In September, India made it compulsory for sugar producers to ramp up exports to at least 4 million tonnes in the current crushing season as the country is set to produce a surplus for a sixth straight year.

Vellayan said that sugar mills are expected to double the supply of ethanol to as much as 1.3 billion litres in 2015-16. Ethanol is a cleaner fuel option as far as carbon emissions are concerned compared with gasoline.

Addressing he annual general meeting of the ISMA, Union Transport and Shipping Minister Nitin Gadkari said that the government is taking all steps to push the sugar industry and as Transport Minister he is in favour of higher consumption of ethanol.

“To give a boost to ethanol consumption, the government is considering allowing automakers to manufacture vehicles that can run entirely on ethanol,” he said, adding that the government will be unveiling policy for flexi-fuel vehicles in January. Gadkari also emphasised on the need to boost ethanol production in the country to meet demand once the flexi-fuel system is in place.

To curb pollution, the government next month will announce a policy to allow automakers to manufacture flexible-fuel vehicles in the country and Gadkari called upon the sugar industry to ramp up ethanol production as demand for it is likely to go up once flexi-fuel vehicles are introduced in India.

“We are working on a policy on flexi-fuel vehicles. These vehicles can run entirely on ethanol, but also have option for petrol. I will make this announcement before January 26,” he said.he annual general meeting of the Indian Sugar Mills Association.

Not much research or study is required to finalise the policy as countries like the US and Brazil are already implementing it, he said.

“This will not only cut crude oil imports, but help in addressing the problem of pollution. Ethanol emits over 80 per cent of carbon dioxide,” Gadkari said.

The minister has asked Germany’s biggest car maker, Volkswagen, to make flexi-fuel vehicles for India.

Gadkari also emphasised on the need to boost ethanol production in the country to meet demand once the flexi-fuel system is in place.

“To increase ethanol blending to the 100 per cent level, sugar mills need to raise production capacity from the current level,” he added.

Currently, 130 out of 500 sugar mills are manufacturing ethanol in India. There is a need to convert all mills towards ethanol production, the Transport Minister emphasised.

Earlier highlighting the problems in pushing up ethanol supplies Vellayan said, “Most impediments are because of controls exercised by states. Some of the state governments levy export and import duties on inter-state movement of ethanol, which in some cases are up to even 8 per cent of the final price realisation.”

Since the fixed price for ethanol includes taxes and duties on account of suppliers, the net realisation to suppliers comes down and therefore, discourages them to participate in supplies to these states, he explained. 

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