Sugar Industry Crisis: Why ISMA Seeks Urgent MSP Hike Amid Ethanol Cuts

He also urged balanced policies to ensure mill viability and safeguard farmers amid rising cane costs and reduced ethanol quotas.

"The upcoming budget is crucial for the sugar sector," he said in an exclusive interview on the sidelines of a press meet by the industry body.

"It should focus on revising the MSP of sugar and restoring ethanol allocations to ensure mills remain viable and farmers continue to receive timely payments."

ISMA is seeking policy and budgetary support to address what it calls the cascading impact of reduced ethanol allocations, surplus sugar, and rising cane prices.

He said the industry had invested heavily in ethanol capacity under the government's ethanol blending programme.

"We have to request the government to increase our capacity because we have taken a lot of loans based on interest subvention," he said, adding that the association would "sit with the government to ensure this imbalance is corrected."

Shirgaokar said ethanol allocations dropped to 28 per cent, leaving mills idle, creating surplus sugar, depressing prices, and delaying cane payments.

He emphasised the need for the upcoming budget to address "a better floor for the MSP of sugar linked to the FRP."

He said, "FRP has gone on increasing, which is good for farmers, but mills must have the capacity to pay."

ISMA has also requested the government to "announce 2 million tonnes of sugar exports" to help balance the market.

"We exported almost 80-90% of the one million tonnes announced last year," he said. "If the export programme is announced earlier, especially before other countries like Brazil and Thailand enter the market, trade flows will come in our favour."

He also called for "tax rationalisation for flex-fuel vehicles" and "benefits for hybrid electric vehicles along with flex-fuel vehicles" to ensure "a level playing field" with EVs.

According to him, "Flex-fuel vehicles are also part of the green economy that we want to create in our country."

On the demand side, Shirgaokar said standards for E22, E25, and E27 ethanol blends "have been announced by the government through BIS," but "there has to be a demand side push through vehicles and pumps dispensing E25, E85, and E100 ethanol."

"The strides taken by India towards ethanol blending are much faster than what Brazil achieved," he added. "We achieved E20 in 10 years, while Brazil took 30-40 years."

Deepak Ballani, Director General, ISMA, said, "We are committed to the welfare of farmers. Sugarcane farmers are perhaps the most comfortable--they get payments on time." He added, "We are working on better sugarcane varieties to enhance productivity and farmer income."

He highlighted that ethanol blending "is a backbone of the industry" and "helps in reducing crude imports and carbon emissions." According to Ballan, "Sugarcane ethanol perhaps has the lowest carbon emission index as per the latest life cycle analysis done by ISMA and TERI."

He said the government's achievement of E20 blending ahead of schedule "is commendable," but added that "capacities are now equivalent to E35." Ballani urged the government to "release a roadmap beyond E20" and promote "flex-fuel and smart hybrid vehicles with differential pricing similar to Brazil."

Madhav B. Shriram, Managing Director, DCM Shriram Industries, welcomed the Uttar Pradesh government's decision to revise the State Advisory Price (SAP) of sugar. "It will make farmers happy and encourage them to grow more cane," he said. "We hope this keeps the cane area stable."

Shriram noted that "once the working capital of a sugar company gets exhausted by March-April, arrears begin to rise." He added, "It's time that the base price of sugar, the floor price, should be increased, commensurate with the cane price."

On exports, he said, "A target of 2 million tonnes is ambitious and healthy, but we need stronger ethanol prices and allocations for the sugar sector to support it."

- ANI