"The decision to remove excise duty on ethanol would increase net realisation to sugar mills by around Rs 5 per litre of ethanol, which should incentivise some mills to divert 'B' heavy molasses or cane juice into ethanol which will reduce some surplus sugar production from next year," Indian Sugar Mills association (ISMA) Director General Abinash Verma said in a statement.
"The immediate need to reduce the surplus of 35 lakh tonnes of sugar blocking almost Rs 10,000 crore of cash flows and the need to improve the current ex-mill sugar prices which are at its lowest in the last 6 years will not get addressed by the above decisions," Verma said.
The ISMA DG said the Centre should "quickly decide" on the industry's request to buy-out 10 per cent of current year's sugar production.
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Cane arrears to farmers have touched Rs 21,000 crore as sugar mills are facing difficulty in making payments due to low sugar prices and high cost of production.
Sugar output is estimated to cross 27 million tonnes in the 2014-15 marketing year (October-September), as against 24.3 million tonnes in the previous year. The annual domestic demand is about 24.8 million tonne.