Karnataka scraps excise permits for ethanol supplies

By: | Updated: August 11, 2017 6:34 AM

Karnataka has scrapped the requirement of permits from the excise department for the movement of ethanol, becoming the first state to implement the amendments to the Industries Development and Regulation (IDR) Act.

The latest amendment to the IDR Act removes any sort of confusion to give states power to regulate only alcohol meant for human consumption, while the Centre will have power over industrial alcohol like ethanol that is not consumed by human beings. (Reuters)

Karnataka has scrapped the requirement of permits from the excise department for the movement of ethanol, becoming the first state to implement the amendments to the Industries Development and Regulation (IDR) Act. The move comes as a boost to the sugar industry that has long been pressing for the removal of such red tape across states on grounds it leads to inordinate delay and corruption, and hinders supplies for the government’s ethanol blending programme.

In a letter to all deputy excise commissioners on July 27, the Karnataka government has said: “No licence will be issued from the excise department for the year 2017-18 in respect of the distilleries listed under sub-para 2.2 and 2.3. (The items covered include ethanol).”

The latest amendment to the IDR Act removes any sort of confusion to give states power to regulate only alcohol meant for human consumption, while the Centre will have power over industrial alcohol like ethanol that is not consumed by human beings. The Karnataka government decision seems to endorse this basic principle of the IDR amendment.

Sugar mills that produce ethanol may now cite the Karnataka government’s move to seek the abolition of such practices in other states, especially in largest ethanol producer Uttar Pradesh. Ironically, while Congress-ruled Karnataka has implemented the amendments to the IDR Act to make inter-state ethanol supplies easier, states ruled by BJP, most notably Uttar Pradesh and Maharashtra, are yet to follow suit despite the fact that the ethanol blending programme has been promoted by Prime Minister Narendra Modi. Following the IDR Act, the Union food ministry had even written to various states, explaining clearly the division of power to regulate both potable and industrial alcohol.

In fact, a state like UP has traditionally resisted any idea of digitisation of the excise department even for routine stuff. This makes matters worse for suppliers.

For instance, a producer wishing to supply ethanol to Punjab from UP has to first approach the Punjab government’s excise department for a permit. He then has to submit it with the UP government, and, curiously, it would again cross-check with the Punjab government about the no-objection certificate obtained by the supplier. If satisfied with the Punjab government’s reply, the producer will be allowed to transport ethanol out of UP.

Since all these communications take a long time to happen and leaves enough scope for bribery and high-handedness by excise officials, producers are often reluctant to supply outside their respective states. And when they are willing to do it, they find it difficult to deliver on time.

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