India could allow sugar mills to use more sweetener to produce ethanolin a move that will likely reduce the chances of easing export restrictions in the near term, according to a person familiar with the matter.
The government is considering a proposal to allow factories to use an additional 800,000 tonnes of sugar for biofuels this year, as the harvest is likely to be larger than expected, said the person, who asked not to be identified because the conversations are confidential. This would be in addition to the 1.7 million tonnes previously allocated.
A spokesman representing the Food and Trade ministries had no immediate comment. The second-largest sugar producer will refrain from releasing any export quotas in the near future, the person said, dashing industry hopes of shipping up to 1 million tonnes in the current season. which ends in September. India's move is likely to support global sugar prices that have fallen this month.
The nation expanded its export restrictions in October to protect domestic supplies ahead of national elections. Prime Minister Narendra Modi's administration, seeking a third five-year term with polls set to begin this month, has taken several steps to contain high food prices. He curbed shipments of wheat and rice, sold grain from state reserves on the open market and cracked down on hoarding.
The measure would help sugar mills and ethanol distilleries that have invested up to 150 billion rupees (US$1.8 billion) in three years to increase cane-based ethanol capacity. It will also help factories make timely payments to farmers. The country aims to blend 15% ethanol with gasoline in 2023-24.
India's sugar production may total 34 million tonnes in 2023-24, compared with a forecast of 33.05 million in January, due to higher-than-expected cane supply in Maharashtra and Karnataka, according to the Indian Association of Sugar and Bioenergy Manufacturers. Sugar production figures are calculated before the diversion of sweetener to produce ethanol
