Maharashtra’s sugar industry is facing fresh financial pressure after the Centre excluded ethanol produced from sugarcane juice, sugar syrup and B-heavy molasses from oil marketing companies’ procurement tender for the 2026–27 supply year. The decision is expected to affect a key revenue stream for sugar mills, with industry estimates suggesting potential losses exceeding ₹7,000 crore and raising concerns about payments to sugarcane farmers.
The policy aims to improve domestic sugar availability and curb further price increases ahead of the festive season and the coming year. However, Maharashtra’s mills are already dealing with financial challenges and expectations of lower sugar production this season. According to estimates presented to Chief Minister Devendra Fadnavis, around 99 million tonnes of sugarcane could be available for crushing, producing approximately 9.6 million tonnes of sugar after an estimated 1.5 million tonnes is diverted towards ethanol. However, an early crushing season and lower yields are expected to contribute to production losses of around 1.8 million tonnes. 
The industry had sought several relief measures, including financial assistance for drought-affected farmers and mills, an increase in the minimum selling price of sugar from ₹31 to ₹45 per kg, and additional support for farmers and sugar factories. The latest ethanol procurement restrictions have added to these concerns by limiting mills’ ability to generate revenue from sugar-based feedstocks.
Although the Centre has not announced a direct ban, the restrictions operate through procurement conditions imposed on oil marketing companies. Ethanol made from sugarcane juice, syrup and B-heavy molasses is excluded, while C-heavy molasses-based ethanol remains eligible. However, C-heavy molasses accounts for only a small share of ethanol production in the sugar industry.
According to the Maharashtra State Cooperative Sugar Factories Federation, the state’s sugar factories have an installed ethanol production capacity of approximately 3,750 million litres. During the 2025–26 season, they supplied around 1,250 million litres. At an average price of ₹60 per litre, ethanol sales generated approximately ₹7,500 crore in revenue, an industry expert said.
Farmer leader Raju Shetti warned that lower ethanol revenues could weaken mills’ cash flow and affect their ability to pay sugarcane farmers. He suggested increasing the price of C-heavy molasses-based ethanol to ₹70 per litre to reduce the financial impact.
Harshvardhan Patil, president of the National Federation of Cooperative Sugar Factories, said Maharashtra’s sugar factories had invested more than ₹35,000 crore in ethanol production facilities in response to the government’s biofuel policy. He argued that restricting sugar-based ethanol could leave much of this capacity underutilised and urged the Centre to consider limiting diversion quantities rather than excluding these feedstocks entirely.
The policy has intensified concerns over investment recovery, mill liquidity and farmer payments, highlighting the challenge of balancing domestic sugar security with India’s ethanol blending ambitions.
