New Delhi, 3 October The states have agreed to 10% blending of ethanol with petrol from October 2008 and are in favour of allowing sugar mills to directly produce the biofuel from sugarcane juice, the farm minister said.
“We have reached general understanding with state governments on 10% blending of ethanol for fuel to be made mandatory from October 2008,” Sharad Pawar told reporters on 3 October after meeting state officials.
Pawar said there was also agreement that producing ethanol directly from sugarcane juice should be permitted.
India currently allows 5% blending of ethanol made from molasses with petrol. The federal cabinet will now take up the issue of doubling this to 10%.
Impediments on the free movement of denatured ethanol and local taxes should also be scrapped, Pawar said, saying the moves were supported by state officials.
Pawar earlier said that directly converting sugarcane juice into ethanol probably offered the country’s troubled mills a way out of recurring problems.
“The answer to the cyclic problem faced by the Indian sugar industry probably lies in conversion of surplus sugarcane directly into ethanol,” he said.
He added ethanol production should be controlled in years when cane supplies were tight so sugar output was not affected.
India’s sugar production in the new season that began on 1 October is expected to top 29 million tonnes, up from a record 28 million tonnes, the minister said.
With domestic consumption estimated at 19 million tonnes and exports placed at 1.5 million tonnes, the country is expected to have a huge opening stock of 11.9 million tonnes on 1October.
“The sugar industry in India is facing an unprecedented crisis situation,” Pawar said, adding that domestic and international prices were unlikely to improve much in the new season.
Sugar is one of the few industries which is still under government control. It fixes prices which mills have to pay to cane farmers and also administers policy on setting up new mills.
“The time has now come to review the controls and move towards deregulation,” Pawar said, but he offered no details.
Pawar said even though India has tremendous potential to produce and use ethanol as a fuel, policy has not provided the right degree of encouragement.
Sugar mills have been shying away from investments in the industry due to complex taxes imposed by some states, he said.