Modi Government Allows Sugar, Cane Juice & Rice to ‘Revolutionise’ Ethanol production

In a major policy shift, the Modi Government has permitted sugar mills to utilize sugarcane juice, syrup and sugar to boost ethanol production in the country in the upcoming Ethanol Supply Year (ESY) 2024-25. The supply year begins November 1. This mega policy change removes the previous restrictions on the amount of sugar that could be allocated for ethanol production.

In addition to sugarcane juice and syrup, the new policy also permits the use of B-Heavy and C-Heavy molasses for ethanol production.

“Sugar mills and distilleries are now authorized to produce ethanol from sugarcane juice/syrup, B-Heavy molasses, and C-Heavy molasses during ESY 2024-25 as per agreements with Oil Marketing Companies (OMCs),” said Ministry of Consumer Affairs, Food, and Public Distribution in its official statement.

In another key decision, the Modi Sarkar has now permitted distilleries to purchase up to 2.3 million metric tons of “RICE” from the Food Corporation of India (FCI) specifically for ethanol production. Distilleries can now participate in the FCI auctions. This move is intended to enhance ethanol output and support the broader strategy of blending ethanol with fuels.

The policy, in total, aims to promote the government’s goals of increasing renewable energy usage and reducing dependence on fossil fuels.

To ensure that domestic sugar availability is not disrupted, the Department of Food and Public Distribution (DFPD) and the Ministry of Petroleum and Natural Gas (MoPNG) will jointly monitor and review the diversion of sugar for ethanol production.

The Ministry of Consumer Affairs, Food, and Public Distribution stated, “DFPD, in coordination with MoPNG, will periodically review the sugar diversion to ethanol production against domestic sugar production to maintain year-round availability for domestic consumption.”

By broadening the range of sugar derivatives allowed for ethanol production, the government aims to enhance the efficiency and flexibility of the ethanol supply chain while safeguarding domestic sugar supplies. The full impact of this policy on the sugar and ethanol markets remains to be seen, with industry stakeholders and market analysts closely monitoring the developments in the coming months.

In May this year, India had breached the 15% ethanol blending and Union Petroleum & Natural Gas Minister Hardeep Singh Puri informed that the country is just on track to reach the 20% ethanol blending target by 2025.