The sugar industry is urging the government to raise the price of ethanol to reflect the recent hikes in the Fair and Remunerative Price (FRP) of sugarcane. The ethanol price has remained unchanged for two years, even as sugarcane rates have risen significantly, said Deepak Ballani, Director-General of the Indian Sugar and Bio Energy Manufacturers Association (ISMA), reported The Hindu Businessline.
“In the last two years, there was a revision of almost 11.5 per cent in the sugarcane FRP. Although my feedstock prices have gone up because it is regulated by the government, the ethanol rate, which is also regulated by the government, has not been revised. And that has really impacted our distilleries quite a bit,” Ballani explained.
In the 2022–23 season, the FRP for sugarcane was Rs. 305 per quintal, while ethanol made from cane juice was priced at Rs. 65.61 per litre. Ethanol made from B-heavy molasses was priced at Rs. 60.73, and from C-heavy molasses at Rs. 49.41 per litre. These prices remained unchanged even after the FRP increased to Rs. 315 per quintal in 2023–24, and further to Rs. 340 per quintal for the ongoing 2024–25 season.
Ballani pointed out that ethanol made from maize currently fetches Rs. 72 per litre, while ethanol from sugarcane still receives Rs. 65.61, which he said is below the cost of production. “This creates a major imbalance in ethanol pricing. In the past, the government used to revise ethanol prices every time FRP was increased. But that hasn’t happened in the last two years.”
He added that the industry has invested nearly Rs. 40,000 crore to build ethanol production capacity, which now stands at about 850 crore litres. But with ethanol prices remaining static, the financial strain is growing.
“The government had assured a proper pricing mechanism for ethanol. If prices aren’t adjusted, the entire ethanol production plan could be at risk,” he said.
The FRP for sugarcane is set to rise again to Rs. 355 per quintal for the 2025–26 season. Ballani said that according to the industry’s formula, this should lead to an ethanol price of Rs. 71 per litre for syrup-based ethanol at an FRP of Rs. 315, and Rs. 73.14 per litre at Rs. 340 FRP. For B-heavy molasses, the price should be around Rs. 65 and Rs. 67.70 respectively, while ethanol from C-heavy molasses should fetch Rs. 61 and Rs. 61.20 per litre.
“With the FRP set to increase again, ethanol prices should also be revised upward. We’re asking the government to announce the new prices before issuing the next tender,” he said.
