New Delhi, Oct 2 (IANS): The incentive on sugar sacrificed for ethanol from B-heavy molasses/sugarcane juice/sugar syrup/sugar has been doubled from October onwards in the monthly release quota for sugar mills for encouraging them to divert excess sugar cane/sugar to ethanol.

With a view to maintain the demand supply position of sugar in the country and to stabilise ex-mill prices of sugar and also to ensure sufficient availability of sugar for domestic consumption, mill-wise monthly release quota of sugar for domestic sale by sugar mills is allocated by the Department of Food and Public Distribution under the Ministry of Consumer Affairs, Food and Public Distribution every month on the basis of stocks held by them, export performance, and diversion of sugar to ethanol.

Now, those sugar mills, which will be diverting sugar to ethanol would be getting the entire quantity of sugar sacrificed on producing ethanol from the various sources in their monthly release quota, a Ministry statement said on Friday.

In every sugar season (October-September), production of sugar is around 320-330 Lakh Metric Tonne (LMT) as against the domestic consumption of 260 LMT. "It results in huge carry over stock of sugar with mills. Due to excess availability of sugar in the country, the ex-mill prices of sugar remain subdued, resulting in cash loss to sugar mills," it said.

This excess stock of 60 LMT also leads to blockage of funds & affects the liquidity of sugar mills, resulting in accumulation of cane price arrears.

With a view to prevent cash loss to sugar mills caused due to subdued sugar prices, the government in June 2018 had introduced the concept of minimum selling price (MSP) of sugar and it at Rs 29/kg, revised to Rs 31/kg from February 14, 2019, the statement added.