What are your thoughts on 20% Ethanol blending target? Is it sustainable? Link

Sabyasachi Majumdar, Vice President of ICRA

"Quite simply if India's entire sugar exports are diverted to ethanol production, the blending target can easily reach 20%!! 

"In recent years, new sugarcane varieties have substantially boosted sugarcane production from UP as well as sugar recovery. A surplus of 5m tonnes of sugar is produced every year and exports are being encouraged through incentives. Firstly global demand & supply situation can reduce exports in some years which creates cash flow problems and storage issues. Also beyond a few years – I believe after 2023–, subsidies will have to stop as there are trade rulings barring them. So, Government is looking for alternative uses for sugar.

"Avoiding the surplus is the biggest worry. For example, petrol makes up just 10% of total oil imports, though a lot of the rest is refined and exported. A 20% saving on oil for petrol has a small impact on forex but it does not reduce our dependency on imported oil very much. [Edit: sugarcane juice can be converted to aviation fuel or bio-butane which can be consumed or exported.]

"However, ethanol blending is a massive boost for the sugar industry, as it brings sustainability of quality incomes to farmers and stability of employment in factories along the supply chain. I see it as a game-changer for our industry! Domestic sugar price will rise, but so will production to compensate. Blending norms can be adjusted if there is a deficit sugar year or production falls away due to disease."