Centre has doubled the incentive on sugar sacrificed for producing ethanol from October this year.
The decision has been taken with a view to encourage sugar mills to divert excess sugar cane and sugar to ethanol and to achieve targets of blending ethanol with petrol in line with Ethanol Blended with Petrol program.
Consumer Affairs, Food and Public Distribution Ministry said, the Sugar mills that will be diverting sugar to ethanol will get the entire quantity of sugar sacrificed on producing ethanol in their monthly release quota.
The Ministry said, in every sugar season-October to September, the production of sugar is around 320 to 330 lakh tonnes as against the domestic consumption of 260 lakh tonne which results in huge carry over stock of sugar with mills.
Due to excess availability of sugar in the country, the ex-mill prices of sugar remain subdued resulting in cash loss to sugar mills.
This excess stock of 60 lakh tonnes also leads to blockage of funds and affects the liquidity of sugar mills resulting in accumulation of cane price arrears.
The Ministry said, by 2025, it is targeted to divert 50 to 60 lakh tonnes of excess sugar to ethanol.
In sugar season 2020-21, sugarcane of worth 91 thousand crore rupees was purchased by mills, which is at all-time high level.
Keeping the expected increase in the production of sugarcane in the sugar season 2021-22, sugarcane of worth one lakh crore rupees is likely to be purchased by sugar mills.