In a significant move, the Indian government has made an announcement regarding a new export duty on molasses. Effective from January 18, this measure is aimed at regulating the molasses market and ensuring an adequate supply for alcohol production within the country. This information comes from a recent notification by the finance ministry.
Efforts to Promote Ethanol Blending
The Indian government’s decision to impose an export duty on molasses coincides with its efforts to increase the blending of ethanol with petrol. In the Ethanol Supply Year (ESY) 2022-23, India achieved a blending rate of 12 percent, and in ESY 2021-22, it reached a rate of 10 percent. As a result of these initiatives, Oil Marketing Companies (OMCs) were able to save approximately 509 crore litres of petrol during ESY 2022-23. This led to foreign exchange savings of over Rs 24,300 crore and payments of approximately Rs 19,300 crore to farmers.
Extension of Reduced Import Duty Rates on Edible Oils
Alongside the new export duty on molasses, the Indian government has extended the reduced duty rates on specific edible oils. This extension applies to crude and refined palm, soybean, and sunflower oils. The concessional duty rates will now remain in place until March 31, 2025, following an earlier reduction in the basic import duty on refined soybean oil and sunflower oil from 17.5 percent to 12.5 percent in June of the preceding year.
Impact on International Trade
Indonesia and Malaysia are the main sources of India’s palm oil imports, while Argentina primarily supplies the country with crude soybean. Ukraine and Russia are the primary origins of India’s sunflower oil imports. These recent measures concerning export and import duties are indicative of the government’s continued efforts to manage the domestic market and control the prices of essential commodities.
