Govt projects 28% ethanol from sugar-based feedstock in 2025-26, industry makes distress call

The Indian Sugar & Bio-Energy Manufacturers Association (ISMA) has expressed concerns over the central government’s decision to reduce the share of ethanol made from sugar-based feedstock in the country’s overall ethanol production by cutting the annual production quota it sets for sugar-based ethanol manufacturers each year.

The basis of their complaint is the recent announcement by the government to cut the share of sugar-based feedstock-derived ethanol in the overall estimated production of 1,050 crore litres of ethanol during the Ethanol Supply Year (ESY) 2025-26 to just 28%, or 289 crore litres. The quota for the last ESY was 315 crore litres of ethanol, which accounted for 33% of the overall ethanol production of 950 crore litres estimated for ESY 2024-25.

ISMA says the share of allocation for the sugar sector has been continuously declining — from 91% in total ethanol supplies in 2019-20, to 83% in 2021-22, 40% in 2023-24, and now to a new low this year. “The drastic reduction in ethanol production for the sugar sector could lead to underutilisation of distilleries, reduced sugar diversion, surplus stocks, and a buildup of cane arrears during the 2025-26 Sugar Season (SS),” said Niraj Shirgaokar, Vice President, ISMA.

According to ISMA, the sugar industry has invested over ₹40,000 crore over the years to create more than 900 crore litres of ethanol production capacity. The capacity development by the industry was in line with the government think tank NITI Aayog’s 2021 Biofuel Roadmap for 2020-25, which projected that the sugar sector would contribute about 55% of the total 1,016 crore litres ethanol requirement to achieve 20% blending by 2025-26.

Shirgaokar said the government’s decision may lead to underutilization of distilleries and urged the authorities to rebalance ethanol allocation in line with the NITI Aayog roadmap by ensuring at least a 50% share for sugar-based feedstocks. He also pointed out that with lower ethanol offtake, only 34 lakh metric tonnes (MT) of sugar are expected to be diverted toward ethanol production, resulting in surplus sugar stocks in the domestic market.

As an immediate measure, the association has urged the government to allocate 150 crore litres of ethanol from sugarcane juice and B-heavy molasses (BHM)—a byproduct of sugar production—during the tender for the next Cycle.