New Delhi, 1 November 2025 – The Indian sugar industry has expressed serious concerns over the government’s ethanol policy for the 2025‑26 supply year, warning that the shift towards grain-based feedstocks could threaten sugar mills’ operations and farmer incomes.
The Indian Sugar & Bio-Energy Manufacturers Association (ISMA) highlighted that the government’s latest allocation plan favors ethanol production from grains over sugarcane, potentially leaving sugar-based ethanol capacities underutilized. Industry sources say this could create a surplus of sugar, placing financial strain on mills and delaying payments to sugarcane farmers.
Analysts note that the policy shift comes amid India’s broader push to expand ethanol blending in petrol, a key part of the country’s strategy to reduce crude oil imports and promote biofuels. However, the preference for grain-based ethanol could have ripple effects on the sugar sector, particularly in major cane-producing states like Maharashtra, Uttar Pradesh, and Karnataka.
The industry has urged the government to reconsider allocations and provide a balanced approach that supports both sugar-based and grain-based ethanol production. Proposals include revising sugarcane pricing policies, ensuring timely payments to farmers, and maintaining sufficient sugar-based ethanol quotas to fully utilize distillery capacity. Farmers and industry stakeholders are closely watching the upcoming Budget announcements, hoping for corrective measures to safeguard their income and investments.
