Press Statement from Mr. A. Vellayan, President, ISMA
On behalf of the Indian sugar industry, we welcome the following steps taken by the Government to help the sugar industry and sugarcane farmers to come out of the current financial crisis:-
(i) Adoption of a fixed pricing policy linked to sugarcane price for ethanol procurement which has ensured quicker finalization of offers.
(ii) Removal of Central Excise duty on ethanol which has given higher returns to mills/suppliers of around Rs. 5 per litre.
(iii) Decision to move to 10% ethanol blending with petrol which has increased the demand for fuel ethanol to 266 crore litres.
(iv) Announcement of interest free loan of around Rs. 6000 crore to the sugarcane farmers, which has resulted in reduction of cane price arrears of Rs. 4000 crore.
(v) Timely decision in September 2015 to export 4 million tons of sugar, duly fixing an export quota for each sugar mill for exporting the same in 2015-16 SS.
The Government has recently decided to assist the sugar mills with a production subsidy of Rs. 4.50 per quintal of sugarcane crushed during 2015-16 SS, amounting to a total of Rs. 1147 crore. We acknowledge that this is the first time ever that the Central Government will be paying a part of the cane price, fixed as FRP, directly to the cane farmers. This shows Government’s commitments towards both the sugar industry and the farmers at large. We welcome this decision of the Government to directly participate in payment of cane price, especially when the revenue realization of sugar mills is not good.
While thanking the Government for the above positive steps taken to help the industry revive from a major financial crisis, ISMA has requested that the State Governments, who are not permitting production of fuel ethanol or delaying excise permissions or creating impediments on inter-state movements by imposing taxes and duties on such an important fuel, should be convinced to remove these impediments. It will not only replace some of the imported petroleum and reduce foreign exchange outgo but will directly benefit the sugarcane farmers in the country.
ISMA also acknowledges the fact that the Central Government is taking steps to rationalize sugarcane pricing policy. We would continue to request acceptance of the recommendations of the Commission on Agricultural Costs and Prices (CACP) for a revenue sharing or a cane price-sugar price linkage formula along with the Price Stabilization Fund to bridge the gap between FRP and what the industry can pay.
The industry is responding in the best possible manner by trying to export sugar, even though exports are unviable and the mills are losing money. The industry body Indian Sugar Exim Corporation (ISEC) was accordingly asked by us to take the lead, who have responded well by contracting for one lac tons of export contracts in October 2015.
The industry has responded well by contracting for 104 crore litres of ethanol supplies (against 78 crore litres in 2014-15), which will straightaway save the Government almost Rs.5000 crore of foreign exchange. We expect to contract for more ethanol supplies, in the next couple of months for the upcoming season, as and when EoIs are invited by oil marketing companies.
On behalf of the sugar industry, ISMA would assure the Government that the industry will do its best to achieve the targets set by it for the industry on sugar exports and ethanol blending with petrol.