Alcohol manufacturers declare NITI Aayog for exemption of import duties in ENA

New Delhi, December 1 () Indian alcohol manufacturers have approached NITI Aayog, seeking exemption from the import duty of extra-neutral alcohol (ENA), which is the main raw material for the manufacture of alcoholic beverages.

Alcohol manufacturers have claimed that there is a massive shortage in ENA's domestic supplies following the diversion of ethyl alcohol for the mixing of biofuels by oil marketing companies (MAC) in the country.

The low availability of ENA (high purity ethyl alcohol) has placed the domestic alcoholic beverage industry in a precarious situation. The price of ENA, which was around Rs 45 per liter in bulk until recently, is now breaking the Rs 60 mark. Even at this price, the supply is uncertain and under stress, said the General Director of the Confederation of Alcoholic Beverage Companies of India (CIABC), Vinod Giri, in a letter addressed to the CEO of NITI Aayog, Amitabh Kant.

The CIABC, in its letter, said that recent floods in Maharashtra and Karnataka have negatively affected sugarcane crops in the region, which will further worsen the supply of ENA and, therefore, believes that it can be recommended to the Ministry of Commerce that allows the import of ENA exempt from import duties until the internal supply improves.

The high import tariff is a major obstacle to the importation of ENA from the international market.

The price of ENA in the international market is around Rs 50 per liter. Under the current duty (150 percent), the imported ENA will cost Rs 125 per liter, which is unsustainable. But without right or with a marginal right, the price can be from 50 to 55 rupees per liter. ENA's availability at these prices will make it sustainable for the industry, said the CIABC.

The reduced availability of primary raw material endangers the survival of the industry and all those who depend on it for a living, he added.

The alcohol industry contributes almost Rs 2 crore through various taxes, sustains the livelihoods of almost 40 lakh producers and employs almost 20 lakh people directly and indirectly.

The tax revenues of alcoholic beverages comprise 20 to 40 percent of the tax revenues of most states. In this way, the alcohol industry is one of the biggest contributors to the Indian economy, he added.

In qualifying the availability of ENA as a problem of several ministries, as it is also being used for biofuel, Giri said the Center is pushing to mix ethanol into car fuels to reduce dependence on oil imports, but the shortage of ENA and its rising costs will make the movement economically unsustainable for MACs and not achieve the goal of merging the current level from 7.2% to 20%.

We have already told this to the Ministry of Petroleum in our letter written a couple of months ago, he added.

According to CIABC estimates, the annual production of ethyl alcohol in the country is Rs 420 million. Of this, the contracts concluded by the WTO for the supply to the mixture with car fuel in the year 2018-19 were Rs 269 million at the current level of 7% ethanol addition (mixture with gasoline). That leaves a balance of Rs 151 million for all other uses, while the demand is Rs 260 million.

While the alcoholic beverage industry needs 190 crore liters of ethyl alcohol, the chemical industry requires another 70 crore liters. There is a deficit of Rs 109 million, which would only grow with higher levels of mixing with MAC target fuel.

A higher cost of ENA will make the combination an ineffective option for the WTO. WTO costs between Rs 35-40 per liter of fuel, averaged for diesel and gasoline if they obtain crude oil from the international market at current prices of around USD 58 per barrel and process it.

It will severely affect their results if they are made to buy ethanol at a cost of Rs 50 more per liter and mix it in a proportion of up to 20 percent. Therefore, a commercially sustainable policy is needed, the agency said.

Demanding restrictions on ethanol blending in automobile fuels at realistic levels based on alcohol availability, Giri said the government should immediately limit the supply of ethanol to mix fuel in molasses-based distilleries, distilleries based on cellulosic material and sugar factories.

He also suggested that the government should also exclude grain-based alcohol from the ethanol mixture so that it is available exclusively to the drinking alcohol industry, We have urged the government to explore new innovative alternatives to make biofuel. Rice stubble that is burning causing air pollution in Delhi and its surroundings, for example, can become ENA. Other sources such as corn, etc. They can also be examined to generate ENA, he added. KKS RVK