A major price gap between two types of ethanol—one made from sugarcane and the other from food grains—is causing financial stress for sugar companies in India.
Jaiprakash Dandegaonkar, director of the National Federation of Cooperative Sugar Factories, raised concerns that sugar mills are at a disadvantage. He questioned why ethanol made from sugarcane is bought at lower rates when both types are blended the same way with petrol.
The Maharashtra government recently allowed the use of grains like rice and maize to produce ethanol. This shift, while aimed at boosting ethanol supply, may hurt sugar mills that had started earning extra income from ethanol production.
Currently, ethanol made from grains sells for about ₹72 per litre, while sugarcane-based ethanol sells for ₹61–₹65, and even lower (₹55–₹65) when produced from sugar or molasses.
“If the government wants to support sugar mills and farmers, it should equalize the rates,” said Dandegaonkar. He also warned that widespread use of grains for ethanol could drive up food prices.
Last year, only 32% of ethanol purchased by oil companies came from sugarcane; the rest was grain-based.
“Sugar alone isn’t enough to keep these factories running. Ethanol provides crucial additional income,” Dandegaonkar said, urging the government to introduce a long-term policy that supports both sugar and ethanol production in a balanced way.
