Food ministry promotes blending

Sugar industry officials and the food ministry are in favour of ethanol blending and aggressively promoting exports in the next season, a fact brought out in a meeting held Tuesday, officials said today.

"The meeting was held to take stock of the situation and to find a way out of the problems," a senior industry official who attended the meeting said.

The ministry is very keen on starting 5 per cent mandatory ethanol blending immediately and introducing 10 per cent optional blending from October-onwards, he said.

The official said the sugar industry has also been urging the government to amend the list of goods under the Central Sales Tax, 1956, to include ethanol.

Once under the CST list, ethanol would be removed from the purview of the state governments, which will not be able to levy any taxes like import, export, and octroi on the commodity.

Under the CST, ethanol would only attract a duty of 3 per cent and no additional taxes.

"The proposals have found favour with both the ministry and the empowered group of ministers examining the issues plaguing the industry. All it needs now is Cabinet approval," the official said.

Separately, another government official said the ministry is also in favour aggressively taking up sugar exports in the next season beginning October, to escape domestic glut and to check falling prices.

"Keeping in mind the estimated sugar output next year, huge supplies lying in the country, falling realisations, the ministry believes India should explore all possibilities of exports," the official said.

Excess sugar output in the country has pulled down wholesale sugar prices to Rs 1,300-1,400 for 100 kg, down around Rs 900 since October.

India's sugar output in the year ending September is seen at around 28.5 million tonnes and year-ending stocks are estimated at over 11 million tonnes. For 2007-08, output is seen at around 30 million tonnes.

The ministry believes the country, in a situation like this, can easily export over 3 million tonnes of the sweetener, the official said.

He said the council meeting also suggested providing special incentives in order to encourage mills to divert their total sugar output into raw sugar in order to capture the export market.

Mills in the country, through the Indian Sugar Exim Corporation, have already struck export deals to sell around 430,000 tonnes raw sugar with shipments beginning November onwards.