Sugar industry welcomes the Budget

The Indian sugar industry has welcomed the various steps taken by the government in Budget 2021-22 to financially help the industry and the sugarcane farmers. The Indian Sugar Mills’ Association (ISMA) feels there are reasons more than one to be happy about the Budget.

The import duty on denatured ethyl alcohol has been proposed to be increased from 2.5% to 5%. ISMA believes this step towards Atmanirbhar Bharat will benefit the sugar industry and the sugarcane farmers. The proposed increase in duty will make imports of denatured ethyl alcohol costlier by around Re.1 per litre at its current global prices.  This in turn will increase the demand for domestic molasses and alcohol produced by the Indian sugar industry and grain-based distilleries, giving better returns, which in turn will ensure better payments to the Indian sugarcane and grain farmers.

ISMA feels the emphasis of the Budget on the environment will go in favour of the sugarcane farmers. The Budget talks of encouraging renewable energy and clean air.  Any move in this direction will give a further boost to ethanol production from sugarcane and surplus grains/ maize because ethanol-blended petrol reduces vehicular pollution and directly improves air quality.  Ethanol is a renewable bio-fuel produced from agricultural crops and hence would directly benefit the Indian farmers.

The sugar industry is very happy to note the allocation of Rs. 4,337 crores for the sugar industry in the Budget Estimates (BE) for 2021-22.  At the same time, the Revised Estimates (RE) of 2020-21 FY, which now increases the budgetary allocation by Rs. 5,376 crores from BE 2020-21, is another very positive decision being taken by the government.  The proposed BE 2021-22 for the sugar industry is Rs. 2,895 crores higher as compared to BE 2020-21.  Almost all these payments are to be made to the sugarcane farmers and, therefore, will directly reduce the cane price arrears and benefit the farmer community.

The provision of Rs. 150 crores in RE 2020-21 and another Rs. 300 crores in BE 2021-22 for extending financial assistance to sugar mills for enhancement and augmentation of ethanol production capacity will give a further boost to setting up of more ethanol factories in the country. This in turn will help reduce surplus sugar and also increase ethanol supplies for ethanol blending with petrol, thereby reducing the net oil import bill of the country and improving air quality.

However, ISMA is of the opinion that the benefits and incentives proposed to be given to the sectors that contribute towards improving air quality and increasing renewable energy production in the country should also be extended to the Indian sugar industry/distilleries, which produce and supply ethanol for blending with petrol.