A sick, state-owned factory in an industry shackled with price controls in one of the country’s most backward states. Not very attractive for an investor. But last month saw expressions of interest by some of the country’s top-ranking companies. And now, Reliance Industries Ltd (RIL) is the big private player that’s won a lease for reviving one of the sugar mills on offer in Bihar.
The reason, of course, is growing investor interest in producing ethanol from sugar cane. And the business opportunity is driven by environmental regulation—the Centre plans to toughen norms for ethanol blending with petrol. Given this, there should be no need for the host of tax incentives for sugar cane-based industries that the state will provide to revive a bunch of sick mills. Bihar is one of our main sugar cane producers, though marred by low productivity. If more investment flows in through this route, its farmers would benefit. Remember, it was because RIL was planning to pay farmers more that the sugar lobby in Maharashtra scuttled its plans there last year.