India Ratings and Research (Ind-Ra) said in its report that the central government’s increased focus on the ethanol is a positive development for the sugar sector as exports are likely to reduce in sugar season 20- 2021.
As per the report, the sugar sector witnessed strong growth during the lockdown in 1HFY21 due to record exports and a flexible domestic demand for sugar.
The report stated that the revenue of the major sector entities grew by 30 per cent in 1HFY21. It was also assisted by an increase in the distillery revenue.
The report further stated that the sugar sector is likely to witness moderation in 3QFY21 and there would be a reduction in the export due to delay in export subsidy announcement. While the government has extended the period of subsidy by three months to December, most large mills had exhausted their quotas by 2QFY21.
The Indian government aims to boost ethanol production, therefore it is taking various steps for the same. To strengthen the financial condition of sugar mills and cut oil imports, the government had asked mills to focus on ethanol production. Earlier, Centre had urged the mills for diversion of excess sugarcane and sugar for the production of Ethanol as a long term solution for addressing the problem of excess sugar stock.
