India may have to ban sugar exports if it decides to increase ethanol blending with petrol beyond the current 20% level, according to a recent report by Fitch Solutions.
The report stated that although India has already achieved the E20 blending target, the country is likely to consider expanding its ethanol mandate further. However, doing so would require restricting or banning sugar exports so that more sugar can be diverted for ethanol production. Such a move could also tighten global sugar supplies and support international sugar prices.
Currently, sections of India’s ethanol industry are pushing for blending levels higher than 20%. Limiting sugar exports could also help the government manage domestic sugar prices, especially when global sugar prices are expected to rise during the April–June quarter.
When asked about plans to increase ethanol blending beyond E20, Sujata Sharma, Joint Secretary in the Petroleum Ministry, said that the blending level currently remains at 20%.
India has previously restricted sugar exports to manage domestic supply. During the 2022–23 season, the country faced concerns over a potential sugar shortage after exports were curtailed. Even though production improved significantly in 2023–24, the government did not allow sugar shipments that year.
Meanwhile, industry sources say the government is also worried about pending sugarcane payments to farmers. As of the end of March in the ongoing crushing season that began on October 1, 2025, sugar mills still owed ₹16,918 crore to farmers.
Although mills have already cleared about 84% of the total ₹1.07 lakh crore in cane dues, the remaining arrears remain a concern. Industry experts believe that increasing ethanol production from sugar factories could help improve cash flows for mills and enable them to clear farmer payments more quickly.
