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  • Writer's pictureTritech

Govt announces incentive for mills diverting sugar for ethanol production

Announcing an incentive to encourage sugar mills to divert the commodity towards ethanol making, the government on Friday said it will allocate a quantity of sugar that is sacrificed for ethanol production for monthly domestic sale along with the regular quota from this month onwards.

The government has been fixing mill-wise monthly sugar quota since June 2018 in order to maintain the demand-supply position of sugar in the country, stabilise ex-mill prices of the sweetener and ensure sufficient availability for domestic consumption.

The sugar quota is fixed on the basis of stocks held by them, export performance and diversion of sugar to ethanol.

In a statement, the Union Food Ministry said, "...incentive on sugar sacrificed for producing ethanol from B-heavy molasses/sugarcane juice/sugar syrup/sugar has been doubled from October 2021 onwards in their monthly release quota." This has been done with a view to encourage sugar mills to divert excess sugarcane/sugar to ethanol and to achieve targets of blending ethanol with petrol in line with 'Ethanol Blended with Petrol program', it said.

"Now, those sugar mills -- which will be diverting sugar to ethanol -- would be getting the entire quantity of sugar sacrificed on producing ethanol from B-heavy molasses/sugarcane juice/sugar syrup/sugar in their monthly release quota," it added.

The Centre is taking several steps for diversion of sugar to ethanol. In order to find a permanent solution to address the problem of excess sugar, the government is encouraging mills to divert excess sugarcane to ethanol.

A target of 10 per cent blending of fuel grade ethanol with petrol has been fixed for 2022 and 20 per cent blending by 2025.

In a separate notification, the ministry has allowed 558 mills to sell 24 lakh tonnes of sugar in October, which is higher by 1 lakh tonnes in comparison to the quota allocated in the year-ago period.

Also, an extension of 30 days to sell the unsold stocks of September has been announced.

The country's annual sugar production is around 32-33 million tonnes, against the domestic consumption of 26 million tonnes.


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