Sugar industry may get sweet reprieve amid ethanol, pricing shocks

Centre's move to export sugar renews optimism that policy momentum may finally turn in favour of producers. Sanjeeb Mukherjee explains

- Sanjeeb Mukherjee

The Centre’s proposed move to permit 1.5 million tonnes (mt) of sugar exports in the 2025-26 season could come as a breather for the sector, which was facing a challenging time after what began as a promising season due to a bumper harvest.

The sugar season runs from October to September. The challenges stemmed from both political and economic factors.

On the one hand, there is growing clamour among farmers to raise the purchase price of sugarcane to offset rising input costs; on the other, the industry is struggling to absorb surplus production in 2025-26.

The first blow to the sector came with the ethanol supply tender for the 2025-26 supply year that started in November.

Of the total requirement of 1.04 billion litres of ethanol for 20 per cent blending, oil marketing companies (OMCs) allocated only about 0.28 billion litres to sugarcane-based feedstocks, which accounted for just 27-28 per cent of total requirement. Grain-based ethanol makers were allocated the remaining 72 per cent (0.76 billion litres).

This was despite the sugar industry investing over ₹40,000 crore to create more than 9 billion litre ethanol capacity in line with NITI Aayog’s 2021 Biofuel Roadmap (2020-25), which projected that the sugar sector would contribute about 55 per cent (0.55 billion litres) of the total ethanol requirement to achieve 20 per cent blending (E20) by 2025-26, the Indian Sugar and Bio-Energy Manufacturers Association (Isma) said in a statement in late October.