Sugar industry urges government to increase ethanol purchase price

03-Jun-2025 05:09 PM

New Delhi. The sugar industry has urged the government to increase the purchase price of ethanol produced from sugarcane, as its share in the petrol blending program has dropped significantly to 28 percent.

According to the National Federation of Cooperative Sugar Factories, while the fair and remunerative price (FRP) of sugarcane continues to rise every year, the price of ethanol remains unchanged, making ethanol production less profitable for sugar mills.

Previously, ethanol derived from sugar contributed 73 percent to the national ethanol blending program, but its share has now fallen to 28 percent. In contrast, the share of ethanol produced from grains has increased sharply from 27 percent to 72 percent.

The industry is also calling for the government to raise the blending target of ethanol in petrol beyond the current 20 percent and to promote the production of flex fuel vehicles (FFVs) to create greater demand and support higher blending goals.

During the 2022-23 marketing season, the sugar industry used sugarcane equivalent to 43 lakh tonnes of sugar to produce 369 crore liters of ethanol, accounting for 73 percent of the ethanol blended with petrol at the national level. However, in 2023-24, this supply dropped to 270 crore liters, only 38 percent of the total blending.

In the current 2024-25 season, it is expected to decline further to 250 crore liters, or just 28 percent of the national blending target of 900 crore liters.

The decline in ethanol production from sugarcane is primarily attributed to stagnant ethanol prices despite rising sugarcane costs, reducing profit margins for mills.

Although there is technical capacity to use up to 40 lakh tonnes of sugar for ethanol production this year, actual usage is expected to be around 32 lakh tonnes only.

The industry has emphasized the urgent need for price adjustments to keep ethanol production economically viable and to meet national energy goals.