 "edible oils")
The Centre will impose a 50 per cent export duty on molasses from January 18 to ensure adequate domestic quantities for ethanol blending and keep inflation in check.
At present molasses attract zero export duty.
Traders said the government has also decided to keep the current import duties on edible oils (crude and refined) unchanged till March 2025.
The previous deadline was March this year.
At present, the basic customs duty on crude edible oils (soy, sunflower and palm namely) is nil while that of refined oils is 12.5 per cent. Agriculture and social welfare cess is levied additionally on both.
The effective import duties on crude oil is 5.50 per cent while that on refined oils is 13.75 per cent.
More From This Section
The cheap imports for one more year will help in checking inflation, but it can hurt domestic oilseed growers.
Mustard farmers are about to harvest a bumper crop of this rabi season in the next few weeks.
According to commerce ministry data, till November 2023, India exported molasses worth $101.33 million in FY24, 37.23 per cent less than the same period last year.
Trade sources said that in the 2022-23 (October to September) sugar season, 0.45 million tonnes of molasses were exported from Maharashtra.
The number stood at 0.175 million tonnes from Karnataka and 0.13 million tonnes from Gujarat, according to market sources.
Around 0.775 million tonnes of molasses were exported from India in the 2022-23 season.
In the current 2023-24 sugar season, Maharashtra issued licences for the export of 0.25 million tonnes of molasses, which can be extended up to 0.75 million tonnes.
Karnataka has issued licenses for export of 50,000 tonnes, which can be extended up to 200,000 tonnes and Gujarat has issued licenses for 0.115 million tonnes that can be extended up to 0.30 million tonnes, market sources said.
Industry body, ISMA (India Sugar and Bio-energy Manufacturers Association) welcomed the move and said that every year around 1.5 to 1.6 million tonnes of molasses are exported.
It accounts for almost 10 per cent of the total quantity of molasses produced.
“In ethanol terms, this molasses is worth around 3.8 billion litres of ethanol,” ISMA said.
This can be ploughed back into the domestic supply chain once exports are curbed.
India exports molasses to countries including Vietnam, South Korea, the Netherlands and the Philippines.
Production of ethanol from sugarcane-based molasses is under the scanner this year due to low sugar production.
It is why the government first stopped ethanol production from sugarcane juice and will now impose a hefty duty of 50 per cent on exports.
In the just concluded ethanol supply year of 2022-23 (December-October), sources said that of the 4.94 billion litres of ethanol supplied to the oil marketing companies (OMCs), a quarter is estimated to be around 1.26 billion litres that came from sugarcane juice or syrup as feedstock, while 2.33 billion litres (around 47 per cent) came from B-heavy molasses.
The rest of the 1.30 billion litres came from grain-based sources.
C-heavy molasses contributed 0.06 billion litres of the total quantity of ethanol supplied to the OMCs in 2022-23.
In 2023-24 ESY, sources said that of the 5.62 billion litres of ethanol promised to be supplied to the OMCs, around 2.69 billion litres would have to come from sugarcane-based molasses while 2.92 billion litres from grains.
India’s net sugar production (after accounting for diversion for ethanol) in the 2023-24 season is estimated to be around 29 million tonnes, down from 33 million tonnes last year.
However, some industry players said that there has been a change in the position over the last few weeks and recovery has improved which is why the output of sugar is now expected to be around 31 million tonnes.
Ethanol is produced from multiple sources in India. It largely comes from sugarcane or grain-based molasses and other sources as feedstock.
In sugarcane, it is either through sugarcane juice or syrup, then B-heavy molasses and C-heavy molasses.
According to industry players, when ethanol is produced from sugarcane juice or syrup directly, then the maximum amount of actual sugar is diverted.
This percentage of diversion is less when ethanol is produced from B-heavy molasses.
Ethanol is produced from C-heavy molasses where no sugar gets diverted in the process.
After stopping the production of ethanol from sugarcane juice, the OMCs have announced hefty hikes in procurement price of ethanol from maize and C-heavy molasses (that diverts the least amount of sugar) to ensure that the blending programme is on track while sugar supplies too aren’t impacted by much.
