The Centre is mulling a policy that can help diversify surplus agricultural produce towards the energy and power sector.

Union MSME minister Nitin Gadkari on Monday said the government is exploring means to substitute Rs 8 lakh crore worth of petroleum imports with ethanol made from surplus sugar, rice and corn. But production of ethanol on such a large scale would need specialised industrial units and this has prompted the Centre to explore the scope of policy intervention.

“India may substitute the import of Rs 8 lakh crore of petroleum with ethanol made from sugarcane, rice and corn which is surplus in the country,” said Gadkari at the annual general meeting of the Bharat Chamber of Commerce.

He added that to meet the need of ethanol on this scale, there is a need to directly make ethanol instead of sourcing it from the sugar mills.

“As an MSME ministry we are trying to make a policy because we are sugar surplus, corn surplus, rice surplus,” he said.

The minister said there is a significant gap between the international price and MSP of sugar.

“Our sugar rate is Rs 34 per kg. International price is Rs 22 per kg. Actually MSP is higher than international price and market price. Here we need to diversify agriculture towards the energy and the power sector,” said Gadkari.

Crisil in a note on the sector said that in a bid to encourage the supplies of ethanol for blending with fuel, the prices of ethanol procured by oil marketing companies were hiked recently by 4.4-6.2 per cent.

“Better ethanol prices, applicable from December 1, 2020, will lead to higher cane diversion towards ethanol production, thereby reducing sugar production by 2 million tonnes in sugar season 2021, against 0.8 million tonne in sugar season 2020,” said Crisil in its report.

Tesla plans for India

Gadkari on Monday told PTI that American electric car major Tesla is set to start its operations in India next year and would also look at setting up of a manufacturing unit based on demand.

The road, transport and highways minister has been pushing for green fuel and electric vehicles to cut India’s huge Rs 8 lakh crore crude imports.

Tesla Inc chief executive Elon Musk had in October said the company will enter the Indian market in 2021.