Improvement in the Condition of the Sugar Industry through Ethanol Production and Trade
28-May-2026 07:17 PM
New Delhi. The Indian sugar industry is currently grappling with numerous challenges and hurdles. The Fair and Remunerative Price (FRP) for sugarcane is increasing annually, causing the cost of sugar production to rise rapidly. On the other hand, the ex-factory Minimum Selling Price (MSP) of sugar has seen no upward revision over the past six years and remains stagnant at ₹3,100 per quintal.
Ethanol prices, too, have remained static, despite a significant expansion in the total cumulative production capacity—an expansion that has involved substantial capital investment. Due to the limited availability of sugarcane, distilleries are not finding adequate opportunities to scale up their ethanol production. Oil Marketing Companies (OMCs) are also procuring only limited quantities of ethanol for blending with petrol, as the blending target had previously been capped at 20 percent; however, this target has now been revised upwards.
The actual yield of sugarcane often falls short of government estimates; consequently, an insufficient quantity of raw material is available for the production of both sugar and ethanol. During the 2025-26 marketing season, the growth in domestic sugar production was significantly lower than anticipated, and the overall production of ethanol also remained unsatisfactory.
It was projected that sugarcane components equivalent to 44–45 lakh tonnes of sugar would be diverted for ethanol production during this period; however, the actual figure failed to exceed the 34–35 lakh tonne mark. The Director General of the apex industry body—the Indian Sugar and Bio-energy Manufacturers Association (ISMA)—states that the Indian sugar sector is in dire need of consolidated policy support and incentives.
Under such a framework, efforts must be directed toward establishing better synergy and balance among the welfare of sugarcane farmers, the profitability of sugar mills, ethanol production targets, and climate-related risks. While an increase in the production, trade, and selling price of ethanol could potentially improve the economic health of the sugar industry, it is equally essential to pay attention to other pertinent aspects as well.