Govt imposes 50% export duty on molasses to boost ethanol production

The move aims to increase the availability of B and C heavy molasses for ethanol production.

The central government has announced 50 per cent export duty on molasses. The proposed export duty shall come into force on January 18, 2024, according to official notification from the Ministry of Finance. The move aims to increase the availability of molasses for ethanol production

Molasses is a by-product of sugar which is utilised for ethanol production to promote a green economy. Of the total ethanol produced in the country, ethanol from cane juice notably accounts for 25-30 per cent while that from B heavy molasses accounts for over 60-65 per cent. Ethanol from C-heavy molasses and grains accounts for the rest.

The Food Ministry in early December directed sugar mills not to use cane juice or syrup to produce ethanol. The central government in mid-December, however, allowed the utilisation of juice as well as B-heavy molasses to produce the ethanol but capped the diversion of sugar at 17 lakh tonnes for the current marketing season.

Without diversion for ethanol, the government has estimated sugar production to decline to 32.3-33 million tonne in the ongoing 2023-24 season (October-September) as against 37.3 million tonne in the previous season.

India has already rolled out 20 per cent blended fuel, though, in a phased manner, in April 2023 and widespread availability is expected in days to come. The government had advanced the target of E20 fuel from 2030 to 2025.  E20 blending in petrol was introduced by the Centre to reduce the country’s oil import cost, energy security, lower carbon emissions and for better air quality.

India exports molasses to countries including Vietnam, South Korea, the Netherlands and the Philippines. Maharashtra, Karnataka and Gujarat are the three states which export molasses.

The move aims to increase the availability