The cabinet is set to approve 25 percent increase in the price for Ethanol produced directly from Sugarcane juice from Rs 47.50 per litre to Rs 59.50 in its bid to encourage Sugar mill to divert production of the sweetener to vehicle fuel to reduce the piling up of Sugar.
The cabinet is also likely to approve the increase in price of Ethanol produced by B-heavy molasses from Rs 47.50 per litre to Rs 52.43.
Government's push to produce more Ethanol from Sugarcane juice would also help the millers for quick release of farmers cane arrears. At present the arrears across India is over Rs 13,000 crore during the current season.
It's estimated that there would be an excess stock of 10.5 million tonnes of Sugar at the end of current Sugar season and another 35 million tonnes of fresh production is estimated for the Sugar season ( Oct 2018 to Sep 2019 ).
Even after meeting the domestic demand of about 26 million tonnes, the stockpile of sweetener would be around 19 million tonnes of Sugar, if the current rate of Ethanol production is not increased significantly.
The government also aims to cut down Crude Oil import, which is on rise, by increasing the blending of petrol by 10 percent.