Limited Use of Sugar Likely in Ethanol Production

12-Jan-2026 08:50 PM

New Delhi. Despite achieving the 25 percent blending target in November 2025, oil marketing companies (OMCs) have allocated only about 289-307 crore liters of sugarcane-based ethanol for blending with petrol during the current marketing season (November-October) of 2025-26, while the remaining approximately 70 percent of the ethanol quota has been given to grain-based distilleries.

The government says that ensuring sufficient supply and availability of sugar for food purposes will be prioritized first, and only then will its allocation for ethanol production and export purposes be considered.

ISMA had earlier estimated the use of sugarcane components equivalent to 50 lakh tonnes of sugar in ethanol production during the current marketing season of 2025-26, but the production of the allocated quantity of ethanol will require the use of only about 74 lakh tonnes of sugar.

As a result, the industry is likely to accumulate a huge surplus stock of sugar. ISMA had urged the government to allow the export of at least 20 lakh tonnes of sugar, but the export quota has been set at only 15 lakh tonnes, a reduction of 5 lakh tonnes.

Due to the large stock and expectations of abundant production, the ex-factory price of sugar has fallen to around Rs 3600 per quintal in Maharashtra, while the high price is being quoted at Rs 3720 per quintal.

Since the beginning of the season, the ex-mill price of sugar has fallen by 8-10 percent and has dropped below the cost of production.

The 15 lakh tonnes of sugar export quota announced by the government is also not proving effective in boosting prices because the pace of shipments is quite slow. The sugar export quota may be reviewed after March 2026.