What is the impact you see of the sharp cut in GST rates in ethanol by the government?

Prima facie it should be positive as it would encourage aggressive ethanol blending by the sugar companies in India. The government announced slashing of GST rates on ethanol meant for blending from 18% to 5% levels. This decision has been taken under the aegis of the Ethanol Blended Petrol (EBP) programme. Currently, oil marketing companies sell petrol blended with ethanol up to 10%.

Ethanol has created an alternate demand for sugar and has reduced the surplus resulting in robust sugar prices in India and globally. This also ensures that there is a shift to cleaner and cheaper fuel with less of pollution to the environment. The ethanol procurement by OMCs has increased from 38 crore litre in Sugar Year 2013-14 up to 350 crore litres in 2020-21. The sugar cycle year runs from October to September next year.