New Delhi: With the forecast of a better-than-normal monsoon this year, sugarcane farming is expected to improve in major producing states like Maharashtra and Karnataka. Rating agency ICRA stated in a recent report that these favorable weather conditions will likely boost sugarcane yields, resulting in a 15% increase in sugar production.
ICRA estimates that in the financial year 2026, integrated sugar mills in India could see their revenue grow by 6–8%. This growth will be supported by higher sales volumes, strong domestic sugar prices, and increased ethanol (distillery) production.
Girishkumar Kadam, Senior Vice President and Group Head of Corporate Ratings at ICRA, said that with better monsoon conditions and higher sugarcane cultivation and yields, total sugar production is expected to rise from 29.6 million metric tons in 2025 to 34 million metric tons in 2026.
However, the report also expressed concern that if ethanol prices remain unchanged, the profit margins of sugar mills may see only a slight improvement. Kadam noted that despite a likely increase in ethanol production in 2026, the sugar stock levels are expected to remain comfortable. Current domestic sugar prices, ranging between ₹39–₹41 per kilogram, are also expected to stay stable into the next season, which should support profitability for the mills.
ICRA’s report suggests that the sugar sector is likely to remain stable, thanks to expected revenue growth, steady profits, manageable debt levels, and continued policy support from the government—especially through the Ethanol Blending Programme (EBP). That said, ICRA emphasized the need to revise ethanol prices to maintain profitability in distilleries.
Speaking on the ethanol blending programme and industry profitability, Kadam pointed out that India has successfully achieved the 20% ethanol blending target set by the government, and discussions are underway to increase this target even further. This would be beneficial for distilleries. However, despite an 11.5% increase in the Fair and Remunerative Price (FRP) for sugarcane, ethanol prices—especially for juice- and B-heavy molasses-based ethanol—have not been revised in the past two years. Hence, adjusting ethanol prices is crucial to ensure the financial health of both distilleries and the overall sugar industry.
