As India moves towards expanding ethanol blending beyond the 20% (E20) target, a global agency has cautioned that the country may have to impose stricter controls on sugar exports. While this could help stabilize domestic prices, it may reduce global sugar supplies and potentially push international prices higher.
According to a report by BMI, a unit of Fitch Solutions, India has already achieved its E20 blending target and is now rapidly increasing ethanol production. However, this will require diverting more sugarcane toward ethanol manufacturing, which could affect both sugar production and exports.
India had faced a sugar shortage in the 2022–23 season, which forced the government to restrict exports. Even in 2023–24, when production improved, export permissions remained limited. In 2024–25, exports were still lower than the permitted quota, and in the current 2025–26 season, the government has so far allowed only a restricted quantity of sugar exports.
Meanwhile, the government is also concerned about pending payments to sugarcane farmers. As of March 2026, around ₹16,918 crore in cane dues remain unpaid, although nearly 84% of the total dues have already been cleared by sugar mills.
The report also noted that ethanol procurement by Oil Marketing Companies (OMCs) has been lower than expected. Sugar mills have received orders well below their total production capacity, while grain-based ethanol units have also supplied limited quantities.
In the global market, sugar prices are expected to gradually rise during 2026. The average price in the first quarter stood at 14.6 cents per pound, and it could increase to around 17.2 cents per pound by the end of the year.
The report also expressed concern over the impact of El Niño. A weak monsoon in 2023 reduced India’s sugar production in the 2024–25 season to 261 lakh tonnes, compared with 320 lakh tonnes in the previous year.
Similarly, sugar production has declined in Thailand, putting additional pressure on global sugar prices. Experts believe that if India further expands ethanol production, it could significantly influence the sugar market. Maintaining a balance between domestic demand and global supply will therefore remain a major challenge for policymakers.
