OMC policies hindering ethanol production in India, says ISMA

The Indian Sugar Mills Association (ISMA) director-general Abinash Verma said that the policies of oil marketing companies (OMCs) and other factors are restricting the output of ethanol in the country.

While addressing the members of the Parliament (MPs) at the Lok Sabha Secretariat, he said that the country has achieved 9.6% ethanol blending with petrol to date and was confident that 10% blending with ethanol will be achieved by the end of the year.

In order to achieve the 20% blending target, he said about 1,016 crore litres of ethanol is required by 2025, for which raw material is available. Though the government has come up with encouraging policies for capacity creation, the delay in bank loans is creating hurdles, he pointed out.

Verma said thatthe policies of OMCs and other factors are restricting the output of ethanol in the country. He said that shortlisting of OMCs has not checked the creditworthiness of the companies. Moreover, OMCs have ignored sugarcane producing states and given large allocations to non-cane producing states like Kerala and Jammu & Kashmir. OMCs are not signing the long-term purchase agreements with existing ethanol producers and new ethanol plants which are not interested in the concessional loans, he added.

The industry body said that the storage capacities at depots of OMCs across the country need to be augmented. Even the Indian railway network and laying of pipelines will be crucial. ISMA further said it is crucial to augment demand and use more ethanol. Therefore, there is a need to launch flex fuel vehicles as early as possible to achieve 20% ethanol blending by 2025, he said.

ISMA also said that with export subsidies not possible after the year 2023 as per the World Trade Organization (WTO) norms, the Indian cane pricing policy requires urgent reforms. If India is a structural surplus sugar producer, it needs to export regularly. According to the industrial body, such high cane prices make Indian sugar uncompetitive and always dependent on Government subsidies for exports.