The sugar industry is confused over Finance Minister Nirmala Sitharaman’s statement. While announcing the 2023 union budget on Wednesday, she said that denatured ethyl alcohol will be exempt from customs duty, and that it will also be part of the ethanol blending programme to help with India’s energy transition.

At present, the ethanol used for blending with petrol is supplied by sugar factories. The imported denatured ethyl alcohol, which is ethanol with some additives, is used by the chemical industry, not for blending with petrol.

"`We don’t know why she mentioned the ethanol blending programme, because imported denatured ethyl alcohol is used only by the chemical industry," said Atul Chaturvedi, Executive Chairman of Shree Renuka Sugars.

Sugar mills in the country are ramping up their ethanol production capacity as India plans to blend petrol with 20 percent ethanol (up from 10 percent now) to reduce the oil import bill. Ethanol is a by-product of the sugar mills, and they stand to profit from the higher proportion of ethanol in petrol.