The Indian government has imposed a 50 per cent export duty on molasses and extended lower import duties on edible oils for another year. Aimed at bolstering domestic ethanol production and ensuring edible oil affordability.
This high export tax will apply to molasses, a crucial component in the production of ethanol. According to a notification from the finance ministry, this policy change aims to secure enough molasses domestically, supporting India’s ambitious target of achieving 20 per cent ethanol blending in gasoline by 2025-2026.
Lower molasses availability due to erratic monsoon rains and subsequent sugarcane shortages had threatened this green energy initiative.
Meanwhile, importers of crude and refined edible oils- palm, soybean and sunflower can breathe easier for another year. Existing concessional duty rates remain in place until 31 March 2025. This move comes as a relief to both consumers and refiners, ensuring continued access to affordable cooking oils.
According to the ministry’s notification, India also imports a significant amount of edible oils, mainly palm oil from Malaysia and Indonesia, as well as smaller amounts of crude soy oil and sunflower oil from Argentina and Ukraine/Russia, respectively.
The government’s actions signal a strategic focus on both environmental and economic fronts. Boosting domestic ethanol production aligns with India’s climate goals and reduces dependence on fossil fuels.
In addition, extending reduced import taxes on edible oils prioritises household spending plans and controls inflation. Reactions to these measures are probably going to be mixed. Producers of ethanol at home should be overjoyed, but exporters of molasses might encounter serious difficulties.
Similarly, edible oil refiners can celebrate continued profitability, while domestic oilseed farmers might express concerns about potential competition from cheaper imports.
