By the end of January 2001, some 500 lakh litres would be exported just from Maharashtra alone, half of which have alreay been exported during the first fortnight of this month. Average monthly alcohol exports during 1998-99 have been placed at around 35 lakh litres, or 400 lakh litres annually.

According to industry sources, industrial alcohol prices have shot up to Rs 13 a litre, from around Rs 8 early this month. Accordingly, the prices of alcohol-based acids too have risen by 30-40 per cent from the previous levels.

The jump in alcohol prices, traders say, is also because of the anticipated shortage of molasses in Maharashtra, following the less-than-normal rainfall last monsoon. This fear-led-shortage has resulted in an over-100 per cent jump in prices of molasses charged by the sugar cooperative societies in te state (prices have jumped to Rs 1,000 a tonne - exluding various levies - from Rs 500 in December last).

In the export markets, Brazil is said to be one of the most lucrative as demand there has jumped considerably following the heavy failure of sugarcane crop in that country, leading to shortage of molasses-based alcohol.

One of the major reasons for exports turning attractive is the duty-drawback benefit made available by the Maharashtra government. Maharashtra is one of the leading states producing sugarcane and sugar. Export of alcohol was under partial control of the state government till last year. It has been decontrolled totally since. This, alongwith the duty drawback, has made alcohol exports an attractive proposition, leading to shortage of both molasses and its by-product alcohol and the subsequent jump in prices.

Some of the leading domestic manufacturers of alcohol are Ashok Orgnic Industries, Somaiya Organics Inida and Vam organic Chemicals.

Indian Chemical Manufacturers Association (ICAM) Chairman (western region) Ravi Goenka said: "By allowing exports, Maharashtra is doing gross injustice to the local alcohol-based industry. Since in the past the Maharashtra government has invited the alcohol-based industry to set up shop in the state so that consumption of cane molasses (the state is the highest producer of sugarcane) is ensured.

``This is indirectly putting pressure on this chemical industry by way of allowing alcohol exports and, coupled with other reasons, alcohol production is adversly affected owing to water scarcity,'' he said.

Mr Goenka added: ``Till recently, the majority of the state's alcohol was supplied to the local industry. However, with te lucrative exports' window opening up, the molasses and alcohol suppliers are unwilling to supply these products to the local industries''.

According to him, because of the rising exports, the state government is losing revenue of around Rs 6 per litre. Add to this the loss to the Central exchequer, which has to pay Rs 2 a litre as duty drawback to the alcohol exporters.