The Indian government has recently imposed a 50% duty on exports of molasses, effective from January 18th. Molasses is a by-product of sugarcane and serves as a raw material for ethanol manufacturing. This move is expected to increase the availability of molasses in the domestic market, consequently boosting the production of ethanol. In addition, the government has extended the existing concessional duty rates on the imports of crude and refined edible oils, including palm, soybean, and sunflower, until March 31, 2025. The purpose of this extension is to ensure that these essential edible oils remain available at affordable prices. The lower import duty was initially set to expire in March 2022 but has now been extended to provide stability and support to the edible oil market.
The decision to impose a duty on molasses exports comes amidst concerns over the decline in sugarcane and sugar production due to an erratic monsoon in Maharashtra and Karnataka. To prevent any shortage of sugar, the government previously restricted the use of sugarcane juice/syrup for ethanol production and advised sugar mills to maximize C-Heavy molasses utilization for ethanol manufacturing.
India has been the largest exporter of C-Heavy molasses, which is primarily used in ethanol production. The Netherlands, the Philippines, Vietnam, South Korea, and Italy are among the key importers of Indian molasses. The Chief of the Indian Sugar and Bio-energy Manufacturers Association (ISMA), M Prabhakar Rao, welcomed the government’s decision to impose export duty on molasses, as it aligns with the association’s request to halt molasses exports completely.
This policy change is geared towards supporting the domestic ethanol industry and ensuring an adequate supply of essential edible oils at affordable prices. By increasing the availability of molasses within the country, it is expected that ethanol production will receive a significant boost. Additionally, extending the concessional duty rates on edible oil imports will enable consumers to continue purchasing these oils at current affordable rates. These measures reflect the government’s commitment to promoting self-sufficiency in ethanol production and safeguarding the availability of essential commodities for the general public.
