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The Indian Sugar Mills' Association (ISMA) has requested the government to raise the price of ethanol derived from sugarcane juice or syrup to Rs 69.85 per litre. The current government-fixed price stands at Rs 65.60 per litre for the supply year starting December 2022. ISMA's demand is based on the Fair and Remunerative Price (FRP) of sugarcane, which has increased to Rs 315 per quintal for the 2023-24 sugar season.
ISMA emphasized that the price hike is essential to encourage additional investments in the industry and boost supply. This, in turn, is crucial to achieving the government's target of 20 per cent blending of ethanol in petrol by 2025. To reach this goal, approximately 1,200 crore litres of ethanol will be required, with only about 400 crore litres contracted for 2022-23.
For the remaining 800 crore litres, ISMA estimates significant capacity enhancement, necessitating an investment of Rs 17,500 crore with reasonable returns. Without adequate returns, the industry and banks may not be able to make these additional investments.
The supply of sugarcane juice has been below the government's expectations in the current year due to the current price's viability. Apart from the price increase, ISMA has also sought certain amendments in tender terms issued by oil marketing companies and the continuation of the interest subvention scheme.
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