India sugar, ethanol industries face market, production price imbalance

In India, ethanol producers still face major challenges even after the Indian government permitted the production of ethanol directly from sugar. Production prices in Uttar Pradesh are currently $2.50 per gallon compared to a government purchase price of $2.06 per gallon.

Producers say that, while there is a 20 percent gross profit on ethanol production at current cane and ethanol prices, transportation costs of the fuel are prohibitive and eliminate profits.

In India, the government recently approved the production of ethanol directly from sugar and made E5 mandatory from this month. E10 is mandated as of October 2008.

Last week, 10 sugar-producing states in India agreed to a framework for a national E10 mandate. India’s sugar crop this year is expected to exceed 29 million metric tons. With domestic consumption at 19 million tons and exports at 1.5 million tons, the country is turning to ethanol production to avoid a catastrophic sugar glut.

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