India slaps 50% duty on molasses exports

livemint.com:

Mint on 29 December reported that the union government was considering a 50% duty on the export of molasses to augment supplies for meeting India's target for cleaner and more efficient ethanol-blended petrol. The government aims to achieve its E20 (20% ethanol blended petrol) target by 2025-26 from its present 12%. India is the world’s largest molasses exporter and contributes about 25% to global trade.

Key buyers include the Netherlands, Philippines, Vietnam, South Korea, and Italy, with major exporting states being Maharashtra, Gujarat, and Karnataka. "Imposition of 50% export duty may succeed only in partially stopping molasses exports to boost domestic ethanol production as the importers use the commodity as cattle feed ingredient, which is a relatively inelastic use," said G.K. Sood, an industry veteran.

Efforts to boost domestic availability of molasses for ethanol production follow recent curbs on sugar exports and directions to mills to cease using cane juice for the biofuel, which was reversed later. An expected shortage in sugar supplies for domestic consumption has already spiked the prices of the sweetener to a 14-year high. In September, a proposal was made to impose a 30% export duty to discourage the export of molasses, but no decision was taken by the top authorities then.

The 50% duty proposal by the food department is in response to limited sugar-based feedstock availability for ethanol production and international market price trends. C-heavy molasses production is estimated to be approximately 4.5% of the total cane crushed, yielding around 225 crore litres of ethanol. It is the last by-product in the sugar refining process, and has no sugar content left in it, unlike B-type and sugarcane juice.