Shares of sugar companies rallied up to 20% in today’s session, as a new government policy prompts boosting ethanol production to achieve 20% ethanol blending in petrol.

Sugar companies were cheered by the notification, with Rajshree Sugars & Chemicals seeing the steepest rise of 20%, while Shree Renuka Sugars rose by 15%, and Balarampur Chinni Mills by 7.15%. Other sugar companies like Avadh Sugar & Energy, Sakthi Sugars, Ugar Sugar Mills, Mawana Sugars and Triveni Engineering & Industries also recorded an uptick in 5% to 10% range. 

In a notification dated September 1, the Department of Food and Public Distribution (DFPD) permitted sugar mills and distilleries to manufacture ethanol from sugarcane juice, sugar syrup, B-heavy molasses, and C-heavy molasses during the Ethanol Supply Year (ESY) 2025-26 without any quantitative restrictions. 

The circular added that the DFPD, in coordination with the Ministry of Petroleum and Natural Gas (MoPNG), would periodically review the diversion of sugar to ethanol production to ensure sufficient availability of sugar for domestic consumption throughout the year.

Apart from the notification, the Supreme Court also dismissed a PIL challenging the Union Government's Ethanol Blending Programme mandating the sale of petrol blended with 20% ethanol (E20). 

The petition was submitted by advocate Akshay Malhotra, requesting the Ministry of Petroleum and Natural Gas to make ethanol-free petroleum available at retail outlets. The petition also included mandatory disclosure of the ethanol content on fuel dispensing machines, while providing clear information to consumers about ethanol compatibility with their vehicles. 

This petition comes to light as the government is pushing for E20 petrol, while consumers complain about a drop in fuel efficiency and faster mechanical degradation. R Venkataramani, Attorney General for India, dismissed the petition, saying that the Government has framed the policy after considering all aspects in order to provide benefits to India's sugarcane farmers and save foreign exchange.