Business EconomyPosted at: Oct 18 2026 9:06PM


Centre Bans Sugar-Based Ethanol Production for 2026-27 to Stabilise Sugar Prices

Pune, Oct 18 (UNI) The union government has decided to prohibit the production of ethanol from sugar-based feedstocks during the 2026-27 supply year in a move aimed at ensuring adequate domestic sugar availability and containing price fluctuations in the market.
According to an official notification, sugar mills and distilleries will not be permitted to use sugarcane juice, sugar syrup and B-heavy molasses for ethanol production during the specified period. The measure is intended to ensure that a larger proportion of sugarcane-derived resources remains available for sugar production, helping maintain adequate supplies for domestic consumption.
The decision assumes significance amid concerns over the potential shortage of sugar and volatility in its prices. By restricting the diversion of sugar and its derivatives towards ethanol production, the government expects to strengthen domestic availability and help consumers access sugar at reasonable prices.
The policy change is also expected to influence the operational planning of sugar mills and distilleries, which have increasingly integrated ethanol production into their businesses as part of efforts to diversify revenue streams and support the country's fuel-blending programme.
With sugar-based feedstocks excluded from ethanol production during 2026-27, greater emphasis is expected to be placed on alternative raw materials, including maize, broken rice and surplus rice. Ethanol production using these feedstocks can continue, helping meet the country's requirements for blending ethanol with petrol while reducing dependence on sugarcane-derived products.
The shift towards alternative feedstocks is expected to play an important role in balancing the government's twin objectives of maintaining domestic sugar supplies and sustaining ethanol production for the energy sector.
Ethanol blending has emerged as a significant component of India's strategy to reduce dependence on imported crude oil, lower fuel import costs and promote the use of domestically produced renewable fuels. Sugar mills have contributed to this initiative by diverting sugarcane juice, syrup and molasses for ethanol production.
UNI SP CDS
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