The Centre has written to cane-growing States urging them to liberalise restrictions on supply of ethanol to boost its blending with petrol. This, in turn, will improve the financial health of the sugar sector leading to payment clearance of arrears due to be paid to farmers by sugar mills, it said.

In a letter to Chief Ministers of key cane growing States, such as Uttar Pradesh, Maharashtra and Karnataka, the ​Minster of Consumer Affairs, Food and Public Distribution​,​ Ram Vilas Paswan, noted that the response ​of the States ​to the new ethanol blending policy (5 per cent with petrol) was not “forthcoming”, as there were “significant transaction barriers​"​ which impede smooth supplies of ethanol.

"States not only impose levy on molasses but also regulate the movement of non-levy molasses. Inter-state movement of ethanol requires NOCs from the State Excise Authorities along with permits from dispatching and receiving States. Most States impose “Export/Import” duties on ethanol leaving and entering their boundaries. There are some instances where octroi is levied on ethanol for entry into municipal limits”, said an official statement quoting ​Paswan's letter.

Urging “dismantling” of the transaction barriers, Paswan said these are “impeding the implementation of the ethanol blending policy, which can help industry attain viability and facilitate liquidation of cane arrears of farmers.

According to the modified ethanol blending policy to facilitate 5 per cent blend with petrol, the government has fixed remunerative prices to encourage the industry to supply ethanol to Oil Marketing Companies (OMCs). The tendering process has been dismantled, the Ministry said.

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