Impact of the Ban on Using Sugarcane-Derived Feedstocks for Ethanol Production

Pune. The sugar industry in Maharashtra—the country’s leading producing state—is expected to suffer a major setback following the central government’s decision to prohibit the use of sugarcane juice, sugar syrup, and B-heavy molasses for ethanol production for the 2026-27 marketing season. While this directive applies nationwide, its impact will be most severe in top-producing states like Maharashtra, Uttar Pradesh, and Karnataka, potentially causing financial losses for sugar mills in these regions.

The new tender issued by Oil Marketing Companies (OMCs) for ethanol procurement excludes ethanol produced from the aforementioned sugarcane-based feedstocks. Sugar mills and distilleries, which had been generating significant revenue from the production and trade of ethanol, will now be deprived of this income stream.

Industry analysts suggest that halting ethanol production will lead to an increase in sugar output, thereby reducing the likelihood of a rise in sugar prices. Fluctuations in sugar prices will affect the earnings of sugar mills, whereas ethanol prices were previously fixed. Maharashtra is a premier producer of both sugar and ethanol; however, the sugarcane crop in the state has been adversely affected by drought conditions this season.