Gadkari Tilt Towards Increased Ethanol Production Pushes Sugar Stocks

Last updated on March 22nd, 2022 at 02:45 am

Sugar stocks have surged as the government has urged to increase the production of ethanol, confirmed sources have said so. This is when Union Road Transport and Highways Minister Nitin Gadkari has urged for an increase in ethanol production.

Speaking at the Sugar & Ethanol India Conference (SEIC) 2022, Gadkari made it clear that “Diversification of agriculture towards energy and power sector is the need of the hour. Farmers need to become Power Suppliers, besides being Annadata. Ethanol, methanol, bioethanol, bio-CNG, biodiesel, bio-LNG, green hydrogen and electric is where the future lies.” The minister has also asked for the reduction in the production of sugar and increased production of ethanol.  

Post this announcement, today the stocks of sugar have surged. Sugar is being seen as a promising option towards clean energy targets that India has. According to a formal statement made by ICICI Securities, “Ethanol demand should grow at a 15 per cent CAGR over FY22-30E driven by the government’s mandate of 20 per cent ethanol-blending in petrol.” 

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Gadkari has categorically said that India is looking at low sugar production but increased levels of ethanol production in the future. According to HDFC securities, sugar sector is known for its cyclical nature. However, it has seen structural changes rational alterations in the government’s policies and flexibility provided, as diversion of surplus cane and B-heavy molasses is now allowed to produce ethanol that can be used for blending with petrol, it said.

These structural changes in the basic fundamentals of the sugar industry in India would automatically help to optimize the sugar production and inventory, thus improving profitability and liquidity position of sugar mills.” As to whether there are any takers of ethanol in the market, there are players already emerging. “Toyota, Hyundai and Suzuki have assured to launch flex engines in 6 months. Biofuel outlets will be opened for ethanol,” said Gadkari at the Mumbai event, recounting that fighter jets which did the flypast two years back during the Republic Day Parade in Delhi had 100% bio-ethanol.