India Imposes 50% Duty Against Exports Of Molasses For Ethanol

A recent notification by the Indian Finance Ministry imposed a 50 percent export duty against the export of molasses outside India. Molasses is a by-product of sugarcane. It is often used as raw material for the production of bio-ethanol (a biofuel). The notice comes at a time when the Indian government is boosting the production of bio-ethanol in the country. The Indian government has planned to blend petrol with 20 percent of ethanol by 2025. In India, sugarcane sources like sugarcane juice and molasses are often used in the production of bio-ethanol.

The government in its notification mentioned, enforcement of duty from Thursday. i.e., 18th January 2023. It would also impose export duty to regulate the supply and demand of commodities, to ensure domestic availability of the same. This notification aims at lowering import duties on edible oil to continue till March 2024.

The Ministry has also extended the existing concessional duty rates on imports of crude and refined edible oils by one year till 31st March 2025. The basic import duty (BCD) on refined soyabean oil and refined sunflower oil was also reduced from 17.5 percent to 12.5 percent.

The reduction in import duty on edible oils would ensure their availability to consumers at affordable prices. The government notification comes in order to ensure sufficient availability of ethanol to achieve ethanol blending target.

In 2023, government undertook various programs for promoting blending of ethanol in petrol under the Ethanol Blended Petrol (EBP) Program. This was undertaken with multiple objectives including reducing import dependence, savings in foreign exchange, providing boost to domestic agriculture sector and for associated environmental benefits. Under Ethanol Blending Petrol (EBP)Program, Public Sector Oil Marketing Companies (OMCs) have saved approximately 509 crore liters of petrol on account of ethanol blending during the Ethanol Supply Year (ESY) 2022-23 resulting in savings of more than Rs. 24,300 crores of foreign exchange and expeditious payment of about Rs. 19,300 crores to farmers bolstering the agriculture sector.

Till last year, government has approved assistance to a total of 1212 projects including 590 molasses-based; 474 grain-based; and 148 dual-feed based projects under interest subvention scheme to enhance ethanol production under Ethanol Blending Petrol (EBP)Program.