Sugar industry hails govt's move to lift ethanol production curbs

New Delhi: The sugar industry on Tuesday welcomed the Centre's decision to remove quantitative restrictions on ethanol production from sugar for 2025-26, terming it a "jackpot for farmers" that will ensure timely cane payments and help keep sweetener prices under control.

The Food Ministry on September 1 issued a notification lifting the 4 million tonne cap on sugar diversion for ethanol production that was in place for the 2024-25 Ethanol Supply Year (ESY).

For ESY 2025-26, there will be no restrictions on ethanol production from sugarcane juice, sugar syrup, B-heavy molasses as well as C-heavy molasses. This is in line with the Sugar (Control) Order 2025. "It is a positive development considering higher sugar production next year. About 5 million tonne of sugar can be diverted for ethanol in 2025-26," Indian Sugar and Bio-Energy Manufacturers Association (ISMA) Director General Deepak Balani said.

The move will help mills keep sugar stocks in balance as well as check prices and ensure timely cane payment to farmers, he added. "We can say it is a jackpot for farmers as they will get cane payment much sooner," All India Sugar Trade Association (AISTA) Chairman Praful Vithalani said. He explained that mills can now produce ethanol and receive quick payments from PSU refineries instead of selling sugar above monthly quotas for working capital during the season. National Federation of Cooperative Sugar Factories Ltd (NFCSF) Managing Director Prakash P Naiknavare said this is in line with the Sugar Control Order 2025.

"This gives flexibility to sugar mills to decide the product profile." Initially, the government had restricted diversion of sugar at 4 million tonne for ethanol in the ongoing ESY 2024-25, but later restricted it to 3.3 million tonne, from which 340 crore litres of ethanol have been produced. ISMA expects 450-500 crore litre ethanol production from the diversion of 5 million tonne of sugar during ESY 2025-26.

According to Vithalani, the industry was concerned about the likely availability of excess sugar at a time when there was no export parity during the 2025-26 season. Global analysts have estimated initial sucrose availability at 35-36.5 million tonnes for the 2025-26 season, while the country needs a maximum of 31 million tonne of sugar. The unrestricted diversion of sugar for ethanol production will arrest a fall in sugar prices and help mills improve cash flow as their highest expenditure is paying interest on loans, industry executives said. The Food Ministry, in consultation with the Petroleum Ministry, would periodically review the diversion of sugar to ethanol production to ensure a smooth supply of sweetener in the domestic market, the notification said.