The government is considering imposing a 25% duty on exports of molasses – a by-product of sugarcane and key ingredient for ethanol productions – as it expects a decline in sugar production in the upcoming season, senior officials said.
The curbs on exports are expected to boost the availability of molasses for domestic distilleries, which will help them meet the government’s ethanol blending target, said an officer on condition of anonymity.
India witnessed the driest August in 122 years with rainfall during the month being 36% below average, causing damage to the sugarcane crop in key cane-producing states such as Maharashtra and Karnataka.
In August, the Indian Sugar Mills Association (ISMA) released its preliminary estimate of sugar production for the 2023-24 season at 317 lakh tonnes against 328 lakh tonnes for the current season. The sugar year starts in October and ends in September next year.
However, ISMA said it is expected to come out with a more accurate estimate after a satellite assessment of the sugarcane plant by mid-October. This is despite the area under the sugarcane area going up to 59.91 lakh hectare this year from 55.66 lakh hectare last year.
The Netherlands, the Philippines, Vietnam, South Korea, and Italy are the top buyers of India’s molasses, which is mainly used as cattle feed. Maharashtra, Gujarat, and Karnataka are the three states which export molasses from India.