In order to help mills divert cane juice for ethanol manufacturing during surplus years, the government has decided to allow sugar mills to manufacture ethanol directly from sugarcane juice or intermediate product called B-molasses. The sugarcane control order of 1966 has been amended in this regard and the same has been notified by the Union Food Ministry.
As per the government, when a sugar factory produces ethanol directly from sugarcane juice or B-molasses, the recovery rate in case of such factory shall be determined by considering every 600 litres so produced as equivalent to one tonne of production of sugar. So far, mills were allowed to manufacture ethanol from by-product called C-molasses, after sugar was taken out while processing raw cane juice. Molasses is also used for manufacturing spirit and alcohol among other products.
Recently, the government for the first time also fixed the price of ethanol produced from intermediary or B-molasses at Rs 47.49 per litre for the marketing year starting December 2018. The price of ethanol produced from C-molasses has been raised by Rs 3 per litre to Rs 43.70 per litre. India, which is over 80% dependent on imports to meet its oil needs, has mandated blending of up to 10% ethanol in petrol but inadequate availability has restricted this to under 4%. Higher price for ethanol will incentivise higher ethanol production.