sincerely, can go a long way in helping the sugar industry. But to realise its full potential, we need to free up the molasses markets completely from any permits, quotas and movement restrictions. The idea to build a buffer stock of sugar will also help,” Gulati said.
The move came after the UP government last week announced a waiver of entry tax, purchase tax and society commission, which together account for R11 per quintal or 3.9% of cane value in the state, ending an impasse as mills had refused to crush at an elevated cane price of R280 per quintal when sugar prices remained subdued and the floor price set by the Centre stood at R210.
The industry has already made it clear the realistic price for sugarcane is Rs 225 per quintal based on the Rangarajan panel formula. The interest-free loans by the Centre could benefit the industry in UP, which is worst hit due to "arbitrary fixing" of SAP of cane, to bridge the gap with SAP by Rs 2.25 per quintal. This assumes that mills in the state would get roughly 30%, or Rs 2,400 crore, of the interest-free loans recommended by the ministerial panel based on their production level and the mills would have to take loans from banks to clear the cane arrears of roughly Rs 2,400 crore.
Although the industry welcomes the move to double the mandatory level of ethanol blending with petrol, senior executives expressed doubt if any such announcement will be followed strictly by oil marketing companies as currently the average blending level in the country stands at a meagre 2% despite the government's diktat to implement the 5% blending level by June 2013. Raising the blending level, however, will mainly have an indirect impact on sugar prices as mills would be encouraged to produce more ethanol out of cane by using the sugar-heavy molasses, instead of sugar, when stocks of the sweetener are adequate in the country and, thus, prevent prices from spiralling downward. Assuming that the direct or indirect impact from such a move will add another Rs 10 per quintal