Concerned over mounting cane price arrears, Food Minister Ram Vilas Paswan today asked state governments to ease curbs on supply of ethanol for blending with petrol, saying this would improve cash flow of millers to make sugarcane payment to growers.
The Centre has taken several steps, including interest free loans for liquidation of cane dues and export subsidy on raw sugar to restore financial health of the sector so as to ensure that millers make timely payment to growers, he said.
The government has also modified ethanol blending programme (EBP) for the benefit of millers, he added.
"However, it has been observed that the expected response to the new EBP has not been forthcoming. There are significant transaction barriers which impede smooth supplies of ethanol for blending," Paswan said in a communication to Chief Ministers of major sugarcane growing states.
"The states would agree that transaction barriers are impeding the successful implementation of Ethanol Blending Programme (EBP) and adversely affecting the financial health of the sugar industry and cane farmers," Paswan was quoted as saying in an official release issued by the Food Ministry.
Urging the states to "dismantle" the barriers which are impeding the implementation of EBP, he said, "EBP can help industry attain viability at a time reportedly surplus of sugar and facilitate liquidation of cane arrears of farmers."
In several states, the state governments are not only imposing levy on molasses but also regulating the movement of non levy molasses. Most states are imposing 'Export/Import' duties on ethanol, leaving and entering their boundaries, he said.
There are some instances where Octroi is also levied on ethanol for entry into municipal limits. The inter-state movement of ethanol requires 'no objection certificates' from the State Excise Authorities along with permits from dispatching and receiving states, he added.
According to the Indian Sugar Mills Association (ISMA), sugarcane arrears have crossed Rs 12,000 crore so far in the 2014-15 marketing year (October-September).
At present, it is compulsory to blend 5 per cent ethanol with petroleum but the oil marketing companies have achieved only 1.37 per cent.
