The Commission for Agricultural Costs and Prices (CACP) has recommended revising the prices of sugarcane-based ethanol in view of the recent increase in the Fair and Remunerative Price (FRP) of sugarcane.
According to the commission, over the last five years, ethanol prices derived from grains and sugarcane have not kept pace with the increase in sugarcane FRP, particularly for ethanol produced from B-heavy molasses and sugarcane juice. The commission believes that this pricing imbalance now needs correction.
Recently, the Government accepted CACP's recommendation and increased the sugarcane FRP for the 2026-27 season by ₹10 per quintal, taking the new FRP to ₹365 per quintal.
CACP observed that assured procurement of ethanol has significantly strengthened the financial position of sugar mills and enabled timely payments to farmers.
Proposal for Dual Pricing Policy in Sugar
The commission has also proposed a major policy change in the form of a Dual Pricing Policy for sugar.
According to CACP, nearly 60-65% of India's total sugar consumption comes from industrial and commercial users. Therefore, the possibility of separate pricing mechanisms for household consumers and large commercial buyers should be explored.
Several state governments and industry stakeholders have reportedly expressed support for such a dual pricing system.
Industry Challenges and Pressure on Sugar Mills
Although India's ethanol production capacity has expanded rapidly over the past decade, the 2024-25 season witnessed lower sugarcane availability and demand-supply imbalances in the market.
As a result, nearly 30% of sugar mills faced operational challenges and closure risks during the season.
The commission warned that expanding production capacity without adequate planning has reduced capacity utilization in several mills, increasing financial pressure on the industry.
Recommendation for a High-Level Expert Committee
CACP has recommended that the Central Government establish a high-level committee comprising:
- Government representatives
- Industry experts
- Farmer representatives
The committee would review long-standing regulations such as:
- Sugarcane reservation areas
- Minimum distance norms between sugar mills
- Revenue-sharing arrangements
The objective would be to prevent unhealthy competition among mills and ensure adequate sugarcane availability.
Nearly Half of Ethanol Supply Target Achieved
The beginning of the Ethanol Supply Year (ESY) 2025-26 has shown encouraging progress.
By 30 April 2026, the country had supplied approximately 515 crore litres of ethanol, representing nearly 49% of the annual contracted target of 1,059 crore litres.
Performance of Molasses-Based Ethanol Sources
Different molasses categories contributed significantly to ethanol production:
- B-heavy molasses:
- Supply of 45 crore litres against a target of 113 crore litres.
- C-heavy molasses:
- Supply of 7 crore litres against a target of 14 crore litres, achieving around 51% of the target.
Overall, the molasses-based sector has supplied approximately 182 crore litres of ethanol so far.
Maize Emerges as the Leading Grain-Based Feedstock
In grain-based ethanol production, maize has emerged as the largest contributor, supplying approximately 182 crore litres of ethanol to date.
In addition:
- Surplus food grains contributed 125 crore litres.
- Damaged food grains contributed 26 crore litres.
Total grain-based ethanol supply has reached approximately 333 crore litres.
Record Monthly Ethanol Supply
According to the report, ethanol supplies remained strong throughout the crushing season.
A notable milestone was achieved in January 2026, when monthly ethanol supply touched a record 31.85 crore litres, and the momentum continued through April.
The continued expansion of ethanol production is expected to play a critical role in strengthening the financial sustainability of sugar mills while supporting India's energy security goals and reducing dependence on imported fossil fuels in India.
Sugarcane Juice Leads Ethanol Supply Among Molasses-Based Feedstocks
Among the various molasses-based feedstocks used for ethanol production, sugarcane juice has emerged as the leading contributor in the current ethanol supply year.
A total supply contract of 164 crore litres of ethanol was signed for production from sugarcane juice. Against this target, approximately 130 crore litres of ethanol has already been supplied.
This means that sugarcane juice-based ethanol has achieved nearly 79% of its contracted target, making it the best-performing feedstock category among molasses-based ethanol sources.
The strong performance of sugarcane juice highlights the growing role of direct sugarcane diversion towards ethanol production and reflects the increasing importance of the ethanol blending programme in improving the financial health of sugar mills and ensuring timely payments to farmers in India
