India's ethanol policy focuses on grains rather than sugarcane
05-Nov-2025 04:24 PM
New Delhi. Over the past three to four years, there has been a significant increase in the use of grains, especially maize and rice, in ethanol production, reducing dependence on sugarcane ethanol production.
The situation has now become such that oil marketing companies are being allocated a much higher quota of grain-based ethanol for supply, rather than sugarcane-based ethanol, and the expected increase in the selling price of sugarcane-based ethanol is also not being made. This has left the sugar industry deeply disappointed and frustrated.
For the 2025-26 ethanol supply season (November-October), oil marketing companies (OMCs) have so far placed orders for 10.51 lakh liters of ethanol, of which only 28 percent has been allocated to sugarcane-based industries, while the remaining 72 percent has been ordered for grain-based distilleries.
Sugarcane-based industries produce ethanol from sugarcane juice, sugar, syrup, B-heavy molasses, and C-heavy molasses, while grain-based distilleries produce ethanol primarily from corn and rice. Distilleries are provided with large stocks of rice at subsidized prices by the Food Corporation of India.
This was not the case previously. In the 2019-20 marketing season, OMCs procured 1.57 billion liters of ethanol from the sugar sector, representing 91 percent of their total ethanol procurement.
By the 2022-23 season, the sugar sector's share remained around 70 percent, but began to decline significantly from the 2023-24 season.
Sugar production was initially projected to decline by 12 percent in the 2023-24 season, prompting the government to impose quantitative restrictions on the use of sugarcane for ethanol production.
As the general elections for the Lok Sabha were approaching, the government sought to control sugar prices. Simultaneously, the use of corn, whose prices were tepid, was encouraged in ethanol production. This trend continues, causing increasing concern and distress for the sugar industry.