The Government has imposed 50 per cent export duty on molasses to ensure higher availability of ethanol for blending with petrol. The existing import duty on crude and refined edible oils (palm, soyabean, and sunflower) has been extended for one more year, while windfall levy on domestically produced crude has been lowered.

Molasses are a key input in the production of ethanol, which is blended with petrol in order to lower the import fuel bill.

“Export duty at the rate of 50 per cent imposed on molasses with effect from January 18, 2024,” a Finance Ministry notification said. India achieved the target of 12 per cent blending of ethanol with petrol in Ethanol Supply Year (ESY) 2022-23, and 10 per cent blending in ESY 2021-22. It has set a target of 15 per cent for ESY 2023-24. ESY starts in November and ends in October.

According to the data of the Petroleum Planning and Analysis Cell (PPAC), ethanol blending with petrol during November 2023, the first month of the Ethanol Supply Year (ESY) 2023-24, stood at 10.24 per cent, as compared to 12.06 per cent during ESY December 2022-October 2023. During ESY 2022-23, the OMCs floated a tender for 599.7 crore litres of ethanol, against which letters of intent (LoIs) for 567 crore litres were issued. During the year, surgarcane juice accounted for 25 per cent of the ethanol production, B-Heavy molasses (45 per cent), C-Heavy molasses (1 per cent) and foodgrains (29 per cent).

The oil marketing companies (OMCs) saved around 509 crore litres of petrol on account of ethanol blending during ESY 2022-23, resulting in savings of more than Rs 24,300 crore in foreign exchange and payments of about Rs 19,300 crore to farmers.

Commenting on the decision, India Sugar & Bio-energy Manufacturers Association requested the government to consider increase in the procurement price of ethanol made from Sugarcane syrup/juice, B-Heavy Molasses and C-Heavy Molasses feed stocks by at least Rs.10 a litre for ESY 2023-24. In a recent letter to the government, ISMA had shared its concern on the current pricing structure that does not adequately reflect the production costs and the significant investments made by the sugar industry to enhance ethanol production from diverse sources.

According to ISMA, every year around 15-16 lac tons of molasses is exported, which accounts for almost 10% of the total quantity of molasses produced. In ethanol terms, this molasses is worth around 38 Cr ltr of ethanol.

OMCs to spend ₹100 cr extra on ethanol purchase after rates hike

Edible Oil, Crude Oil

Meanwhile, in a separate notification, the Finance Ministry said the existing duty rates on import of crude and refined edible oils, that is palm, soyabean and sunflower, has been extended till March 31, 2025. It was to end on March 31, 2024. Lower import duty on refined edible oil aims to ensure that these kitchen essentials are available at lower prices. Though, prices of edible oils are low, prices are likely to be affected considering the impact of mustard production this crop season.

The Ministry also announced that windfall levy, technically known as Special Additional Excise Duty (SAED), on domestically produced crude has been lowered to Rs 1,700 a tonne from Rs 2,300 a tonne effective Tuesday. The reduction is due to a fall in global crude prices. Levy on export-bound diesel, ATF (Aviation Turbine Fuel) and petrol will continue to be NIL.

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