Sugar Export Boon: Government Opens Gates, But Industry Cries Foul Over Pricing!

The Indian government has permitted the export of 15 lakh tonnes of sugar for the current season. The Indian Sugar and Bio-Energy Manufacturers Association (ISMA) has praised this decision, stating it will aid in managing production planning and easing pressure on domestic stock levels. Deepak Ballani, Director General of ISMA, mentioned that while international market parity is not currently favorable, advance permission allows for better planning of raw sugar production and contracts.

ISMA anticipates an export window from mid-December to March, coinciding with the period when Brazilian sugar is less available globally. Despite this positive step, ISMA views it as a temporary relief. The association is advocating for substantial long-term policy reforms, particularly concerning the Minimum Selling Price (MSP) for sugar and pricing for ethanol.

Ballani pointed out that the MSP has remained stagnant at ₹31 per kilogram for the last five to six years, while the actual cost of production ranges between ₹41-42 per kilogram. ISMA is urging the government to revise the MSP to ensure stable domestic prices and adequate farmer protection.

Furthermore, ISMA raised concerns about ethanol allocation. The industry has invested approximately ₹40,000 crore and built a capacity of about 900 crore liters for the E20 blending program. However, the actual ethanol allocation for the current season is only around 290 crore liters, which is significantly below projections. This low allocation makes operations economically unviable and negatively impacts the sugar industry's overall financial health.

To address these issues, ISMA has recommended reserving 50% of ethanol allocation for sugar feedstock, extending priority allocation beyond producing states, and restricting imports of denatured alcohol to allow domestic ethanol producers to supply the chemical industry.

Impact: This news can significantly impact sugar manufacturing companies by providing an avenue for increased sales and potentially better revenue realization, depending on global market conditions. The government's decisions on MSP and ethanol pricing will critically affect the profitability and investment decisions of these companies. A favorable policy environment could boost farmer income and drive investment in renewable energy (ethanol production).

Impact Rating: 7/10

Difficult Terms: Minimum Selling Price (MSP): The lowest price at which sugar can be sold in the domestic market, set by the government. Ethanol Blending Programme: A government initiative to mix ethanol (a biofuel) with petrol to reduce reliance on fossil fuels and lower pollution. E20 means 20% ethanol mixed with petrol. Raw Sugar: Sugar that has undergone initial processing but is not yet refined into the white sugar typically sold in stores. White Sugar: Refined sugar, which is pure sucrose. Feedstock: The raw material used in a process. In this context, sugarcane used for producing ethanol. Denatured Alcohol: Ethanol that has additives to make it unfit for human consumption, often used for industrial purposes.