HomeRenewable energy ›Sugar Industry Seeks Policy Interventions to Meet 20 percent Ethanol Blending Target

Sugar Industry Seeks Policy Interventions to Meet 20 percent Ethanol Blending Target

The Indian Sugar & Bio-Energy Manufacturers Association proposes a roadmap to a 55 percent or even 60 percent ethanol supply contribution, contingent on policy interventions and farmer support.

May 13, 2024. By Anurima Mondal

The Indian Sugar & Bio-Energy Manufacturers Association (ISMA) explores the policy interventions necessary for meeting the 20 percent ethanol blending target in future.

By examining the economic and environmental benefits of ethanol blending, ISMA aims to provide a comprehensive overview of the road ahead in achieving this critical milestone for the Nation.

Prabhakar Rao, President of the Indian Sugar and Bio-Energy Manufacturers Association (ISMA), said, "The Indian sugar industry is well-positioned to meet the government's ambitious 20 percent ethanol blending target till 2030. Our industry can contribute a significant 55 percent of the ethanol requirement, and even increase that to up to 60 percent if we can get stable policy support and investment on sugarcane production stabilisation."

Striving to achieve the same, ISMA is confident that the sugar industry is capable of meeting the 55 percent ethanol supply to meet the 20 percent EBP target till 2030. In addition, the industrial landscape holds the ability to stabilise the policies and investment in sugar production.

Policy Interventions Needed for Ethanol Blending

To enable the sugar industry to meet the Ethanol Blending Requirement after meeting the sugar demand fully, the following policy intervention is crucial:
The sugarcane farmers and the sugar industry needs to harmoniously co-exist. While the FRP is announced by the Government every year, the MSP for sugar remains unchanged for more than 5 years. It is of paramount importance to fix the MSP and ethanol prices along with the FRP every year establishing a harmony and financial viability.

The ethanol production and the sugar production will reach an equilibrium based on the market driven economics. The revenue share ratio (of sugar) for Indian cane farmers is 75 percent which is far higher, as opposed to 70 percent in other important cane-growing countries like Thailand and Brazil. Therefore, the 75 percent ratio proposed is very reasonable. As such, despite the sugar prices being the lowest in India, the farmers are paid the highest Fair and Remunerative Price (FRP) as compared to other cane-growing countries. Based on the FRP of INR 340 per Qtl for the sugar season 2024-25, it is estimated that the industry had to pay INR 1,20,000 Crs to the cane farmers. That’s why the sugar industry needs to be in a good financial position to continue shouldering this responsibility in the future without any financial burden on the Government. With stable policy support, the sugar industry can attract more investments, leading to further capacity creation that can help meet the domestic sugar requirement and produce ethanol as per the EBP program.

From regulatory tweaks to stakeholder collaboration, and international inspiration, ISMA has laid out the framework for a successful sugar industry transformation. The stoppage of ethanol production from December 2023 has resulted in excess closing stock of about 9.1 million tons over and above the 5.5 million requirement. This led to drop in sugar prices and losses to the industry besides delay in payments to the cane farmers. Thus, the execution of policy interventions to empower the sugar industry to meet the 20 percent ethanol blending prerequisite is not merely a calculated effort in the direction of sustainable energy practices but also a vital move in contributing to the financial strength of the sector and welfare of the farmers.
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