New Delhi: The Indian government may restrict the use of sugarcane juice, sugar syrup and B-heavy molasses for ethanol production as it looks for additional measures to improve sugar availability and contain elevated retail prices, according to industry discussions. Such a move would encourage sugar mills and distilleries to rely more heavily on C-heavy molasses for ethanol, potentially leaving a larger quantity of sugar available for domestic consumption.
The possibility of tighter restrictions was highlighted by Madhav B. Shriram, Vice-President of the Indian Sugar & Bio-Energy Manufacturers Association (ISMA), at a conference organised by the industry body in New Delhi. He said the sugar industry is prepared to use C-heavy molasses, which contains no sucrose, for ethanol production if required. According to him, greater use of C-heavy molasses could help increase the quantity of sugar available in the domestic market at a time when prices are under pressure.
India had previously adjusted its ethanol policy in response to domestic sugar availability. In December 2023, the government restricted the diversion of sugarcane juice, sugar syrup and B-heavy molasses for ethanol, before subsequently allowing sugar mills and distilleries to produce ethanol from all three feedstocks along with C-heavy molasses for the 2024-25 ethanol supply year. The Department of Food and Public Distribution said it would periodically review sugar diversion for ethanol against domestic sugar production to ensure adequate availability. 
The issue has gained importance as the government steps up efforts to control sugar prices ahead of the festive season. The Centre has already imposed stock limits on sugar dealers, restricted bulk consumers to stocks equivalent to 15 days of consumption, ordered physical verification of stocks and permitted duty-free imports of 10 lakh tonnes of raw sugar to strengthen domestic availability.
The government has also advised sugar mills and states to begin the 2026-27 crushing season from October 15, earlier than the normal schedule. The move is expected to significantly increase sugar production in October and improve supplies ahead of the major festive demand period.
The pressure on the domestic market has also prompted the government to ask sugar mills to maintain adequate supplies and sell at reasonable prices during the festive season. Reuters reported that retail sugar prices had reached record levels in August before easing somewhat, although prices remained significantly higher than two months earlier. The government has also received applications covering a substantial portion of the 1 million-tonne duty-free raw sugar import quota.
Any restriction on sugarcane juice and B-heavy molasses for ethanol would, however, have implications for India's biofuel programme. The government has spent years encouraging mills to divert sugarcane and sugar-based feedstocks to ethanol to achieve blending targets, improve mill liquidity and support timely payment of cane dues. Official policy currently recognises sugarcane juice/syrup, B-heavy molasses and C-heavy molasses as ethanol feedstocks.
Under the current policy framework, ethanol made from sugarcane juice, sugar or sugar syrup carried an ex-mill price of ₹65.61 per litre for ESY 2024-25, compared with ₹60.73 per litre for B-heavy molasses and ₹57.97 per litre for C-heavy molasses. This price differential means that a shift towards C-heavy molasses could affect the economics of ethanol production for sugar mills and distilleries.
The potential policy change therefore reflects a balancing act between two government priorities: maintaining adequate sugar supplies and prices for consumers while continuing to support ethanol blending and the financial health of the sugar industry. For now, any fresh restriction on sugarcane juice or B-heavy molasses should be treated as a possible policy move rather than a confirmed government order, until the Centre formally notifies the industry.
With early crushing, duty-free imports, stock controls and closer monitoring of sugar production and sales already underway, the government appears to be using multiple measures to increase domestic availability before the festive season. A further shift in ethanol feedstock policy could become another tool if sugar prices and supply conditions remain under pressure
