Sugar industry seeks cap on exports to divert supply for ethanol

Senior industry official said the government also seems amenable to this, as producing more ethanol has become a national priority given the impact of the West Asia war on petroleum prices

With sugar exports from India finding it difficult to get buyers due to low parity in international markets, a section of the industry has started lobbying with the government to cap exports at around a million tonnes to divert the balance for producing ethanol needed for blending beyond the existing 20 per cent, a senior industry official said.

 

He said the government also seems amenable to this, as producing more ethanol has become a national priority given the impact of the West Asia war on petroleum prices.

 

The move is also finding favour because the ethanol industry has created production capacity of around 20 billion litres, while tenders have been floated for just around 10–11 billion litres for 20 per cent blending.

   

India permitted sugar exports of 2 million tonnes since November, of which only around 0.7–0.8 million tonnes could be shipped so far, as Indian sugar is priced over $450 per tonne (FOB), while globally sugar is available at lower rates.

 

On Monday, when asked whether the government is looking to expand ethanol blending beyond 20 per cent due to the West Asia crisis, Sujata Sharma, joint secretary in the Petroleum Ministry, quipped that the blending percentage currently stands at 20 per cent.

 

A few days ago, BMI, a unit of Fitch Solutions, said in a report on the 'outlook for sugar prices' that any hike beyond the E20 level will require India to ban sugar exports, potentially helping the government control domestic prices when global rates are predicted to jump in the April–June quarter.

 

“India, having achieved E20, appears increasingly likely to pursue a further expansion of its ethanol mandate. While India has capacity for further ethanol expansion, realising it will require the country to further restrict sugar exports, weighing on global supply and underpinning prices at the margin,” the report said.

 

Industry sources said that the government is concerned that ₹16,918 crore of sugarcane dues (to be paid to farmers by mills) have piled up till the end of March in the current crushing season that started from October 1, 2025.

 

A few days ago, the Indian Sugar and Bio-Energy Manufacturers Association (ISMA) approached the Prime Minister’s Office (PMO) to fast-track a calibrated roadmap to push India’s ethanol blending programme beyond 20 per cent to 22 per cent, 25 per cent, and 27 per cent, given global energy market uncertainties.

 

It said India now has ethanol distillation capacity of nearly 20 billion litres (sugar and grain-based), with the sugar sector alone accounting for around 9 billion litres.

 

“Against this, the current ethanol requirement for E20 blending is estimated at around 11 billion litres annually, implying that only about 55 per cent of the installed capacity would be utilised at E20 levels. This clearly indicates that ample domestic capacity already exists to support higher blending levels,” the letter added.

 

ISMA said to ward off global energy challenges, accelerating domestic biofuel utilisation is both an economic and strategic imperative.