Policy shifts to aid blending targets, improve mill liquidity

The government has allowed production of ethanol from sugarcane juice, syrup and all types of molasses without any volume restrictions for the 2025/26 season, reversing curbs imposed this year due to tight cane supplies as per reported by Reuters.

In a notification on Monday, the Ministry of Consumer Affairs, Food and Public Distribution said sugar mills and distilleries will be free to produce ethanol from 1 November, the start of the new ethanol supply year. The ministry will review sugar diversion to ethanol periodically to ensure steady availability of sugar in the domestic market.

India, the world’s second-largest sugar producer, had restricted ethanol output in the current year as lower cane yields tightened supplies. But with favourable monsoons over two successive years, cane acreage has expanded, raising expectations of higher production in the upcoming season.

“This is a welcome move. The government should also raise the ethanol procurement price so that mills can pay farmers the government-fixed cane price,” said a Maharashtra-based sugar miller.

The policy shift also supports India’s clean energy transition. As the world’s third-largest oil consumer, the country has set a target of blending 20 per cent ethanol in petrol by 2025/26, up from about 12 per cent at present. The move is expected to cut import bills, boost farm incomes and reduce emissions.