A section of India’s sugar industry has urged the government to cap sugar exports at around 1 million tonnes so that more sugar can be diverted for ethanol production, which is required to increase fuel blending beyond the current 20% level.
According to a senior industry official, global market conditions have made it difficult for Indian sugar exporters to find buyers. Indian sugar is currently priced at over $450 per tonne (FOB), while sugar in international markets is available at lower prices, making exports less competitive.
The government had permitted the export of 2 million tonnes of sugar from November, but only about 0.7–0.8 million tonnes has been shipped so far.
Industry representatives believe limiting exports could help redirect surplus sugar towards ethanol production. This move aligns with the government’s priority to expand ethanol blending, especially as the West Asia conflict has pushed up global petroleum prices, increasing the importance of domestic biofuels.
At present, India has built ethanol production capacity of nearly 20 billion litres (including both sugar- and grain-based sources). However, the current E20 blending programme requires only about 10–11 billion litres annually, meaning that a large portion of installed capacity remains underutilised.
When asked whether ethanol blending could be increased beyond 20% due to rising oil prices, Sujata Sharma, Joint Secretary in the Petroleum Ministry, said that the current blending level remains 20%.
Meanwhile, a recent report by Fitch Solutions suggested that any move to raise blending levels beyond E20 may require India to restrict sugar exports. Such a step could tighten global supply and potentially support international sugar prices.
Industry sources also noted that ₹16,918 crore in sugarcane dues to farmers remained unpaid by sugar mills as of the end of March during the ongoing crushing season that began on October 1, 2025. Increasing ethanol production could help mills improve cash flow and clear farmer payments faster.
Recently, the Indian Sugar and Bio-Energy Manufacturers Association approached the Prime Minister’s Office, urging it to fast-track a phased roadmap to raise ethanol blending beyond 20%. The association proposed gradual targets of 22%, 25%, and 27% to strengthen India’s energy security amid global market uncertainties.
ISMA highlighted that India already has sufficient capacity to support higher blending levels. Of the 20 billion litres of total ethanol distillation capacity, the sugar industry alone accounts for around 9 billion litres.
The association added that accelerating the use of biofuels is both an economic and strategic necessity for India, helping reduce dependence on imported crude oil while strengthening the domestic sugar and ethanol sectors.
