New Delhi— In a significant move, the Indian government has decided to impose a 50 per cent export duty on molasses, effective from January 18. Molasses, a by-product of sugarcane commonly used in alcohol production, will now attract this duty if derived from the extraction or refining of sugar, according to a recent notification by the finance ministry.

In a parallel development, the finance ministry has extended the existing concessional duty rates on imports of crude and refined edible oils—palm, soybean, and sunflower—by an additional year, continuing until March 31, 2025. Notably, the import duty on refined soybean oil and sunflower oil was reduced from 17.5 per cent to 12.5 per cent in June of the previous year.

Sugar industry stocks, including companies such as Balrampur Chini and Dhampur Sugar, are expected to face increased scrutiny following the government's imposition of a 50 per cent export duty on molasses. The official notification, effective January 18, 2024, is anticipated to ensure a more abundant supply of molasses for domestic companies, potentially supporting their ethanol blending targets.

Speaking on the matter a senior official, Atul Chaturvedi of Shree Renuka Sugar in an interview with CNBC, emphasized the significance of the move, stating that a quarter of globally traded molasses originates in India. He suggested that the government should consider banning molasses exports, especially given the existing ban on sugar exports.

This development is poised to impact states heavily involved in molasses exports, namely Maharashtra, Gujarat, and Karnataka. India's molasses export destinations include Thailand, the Netherlands, South Korea, the UK, and the Philippines.

The government's decision is seen as a strategic move to bolster the domestic ethanol industry, aligning with ongoing efforts to promote sustainable energy practices and reduce dependency on traditional fossil fuels. As the nation continues to navigate economic shifts, these policy changes are anticipated to have a notable impact on both the sugar and ethanol sectors.