Informist, Monday, Sept. 15, 2025

By Pallavi Singhal and Afra Abubacker

NEW DELHI – The Indian Sugar & Bio-energy Manufacturers Association expects the government to provide clarity on the sugar export quota for the 2025-26 season (Oct-Sept) by the end of October, Deepak Ballani, director general of the association, told Informist. "We understand that the exports will not happen in November, December. But we have asked them to give us clarity by October-end and maybe the exports, physical exports, could start from January," he told Informist in an interview on Friday on the sidelines of the India Sugar & Bio-energy Conference.

Citing surplus sugar production in the coming sugar season – estimated by the association at 34.9 million tonnes in July and kept unchanged in September – ISMA has been urging the government to allow 2 million tonnes of exports in 2025-26. "We humbly request the government to permit the export of 2 million tonnes of sugar in 2025-26, with an early policy announcement so that mills can contract forward, secure better prices, plan their production, and maintain market balance," ISMA President Gautam Goel had said on Thursday at the inaugural session of the event.

Speaking on the sidelines the same day, Food Secretary Sanjeev Chopra said the government was yet to decide on its export policy and this would be contingent on the sugar production in 2025-26. According to several officials who spoke at the event, the government will wait for the agriculture ministry's first advance estimates for the ongoing crop year 2025-26 (Jul-Jun) to take a call on the matter. The estimates are expected towards the last week of September, they said.

ISMA is batting for an early announcement on exports, saying this would help the industry take better export calls as it would have a longer window to secure better prices. In the 2024-25 sugar season, the government had announced the export quota in January, allowing mills to sell 1 million tonnes of sugar by September. Mills are estimated to have shipped only 800,000 tonnes by September.

Following are edited excerpts from the interview:

Q: According to ISMA's most recent numbers, sugar production is estimated at 34.9 million tonnes. But some members of the industry believe it could go up to 38 million tonnes. What are you expectations?

A: We have retained our gross production estimate to 34.9 million tonnes. I do not believe it will be 38 million tonnes. We stick by our numbers, which are very scientific. As per our estimate, we believe it could be around 35 million tonnes. People may say 36, 38, 40 (million tonnes), but we conduct a proper scientific satellite imaging and a crop tour. So, 35 (million tonnes of sugar) is something which we have estimated and out of that, we have said around 28.5 million tonnes will be the consumption, of which around 4.5 million tonnes will be diverted (for ethanol). We have room for 2 million tonnes of exports but to start with, we have requested the government to allow 1 million tonnes of exports initially. Wait for a couple of months, after that see the crop again, and permit 1 million tonnes again. So, that is the real dynamics and that is what we have requested.

Q: Since you have retained the gross production estimate at 35 million tonnes, does it mean there are no regional state-wise changes that you see?

A: There have been very minor changes. We see slightly higher production in Maharashtra, which is being compensated by slightly lower production in Uttarakhand, Punjab, and Haryana due to floods. Whatever we are losing a bit in these three smaller states, we are compensating with slightly higher production in Maharashtra. So, the number remains the same.

Q: This year's sugar production is forecast to be 18% higher than last year, but is well below 2022-23 and only slightly above 2023-24. Sugar diversion in 2022-23 was only 4.3 million tonnes and 2.4 million tonnes in 2023-24. What is your outlook for sugar diversion and exports in 2025-26 and how different is it from 2022-23?

A: In the 2022-23 sugar year, we had very good international markets and exported a lot of sugar (about 6 million tonnes). Ethanol capacities since then have increased substantially. Today, we have capacity of 8-9 billion litres. Even discounting for efficiency, we (sugar-based distillers) could supply 6.5 billion litres, but we expect 4.5 billion litres to be supplied in 2025-26. Now, the world market cannot accept more than 2 million tonnes of exports. In 2022-23, the world was short on sugar and India didn't have as much distillation capacity, and so easily absorbed the (6 million tonnes) sugar we exported.

Q: Is there a shift in the share of sugar feedstocks for ethanol?

A: Last year, due to lower sugarcane production, grains contributed more. This year, sugar feedstocks will contribute to about 40% of the total ethanol output. Even after allocating 4.5 billion litres to sugar, grain-based ethanol will also be supplied. This year, sugar can produce upto 5 billion litres of ethanol, but seeing realistically, I estimate it at 4.5-4.7 billion litres. The share of sugar is unlikely to exceed 50-60%. But going forward, since we are working on productivity, we are working on new varieties, the supply of sugar for ethanol diversion could rise.

Q: Is the industry ready for higher ethanol blends?

A: Right now, the capacity for ethanol production is about 18 billion litres, but offtake is only 11.5-12 billion litres. Collectively, both sugar and grain feedstocks can cater to E30 blending right away. With efficiency adjusted at 80-90%, supply can be at 15-16 billion litres, which almost equal to what they (the country) would require for a E30 blend. The only way forward is to increase blending and promote flex-fuel vehicles.

Q: Is there concern about GST changes affecting cold drink demand?

A: I think there is some confusion. GST on cold drinks was already 40%, including 12?ss. What they have done is subsume cess into the GST. I think it is perhaps beneficial because they can claim some credit on that entire 40% GST now. There's no real change. In fact, packaged foods have seen a GST decrease, which may marginally boost sugar consumption.

Q: Will there be a price increase for cold drinks due to GST changes?

A: No, there shouldn't be a price increase. Coke, Pepsi, and Campa might decide independently, but no increase is envisaged.

Q: You said you are trying to raise cane yields through various means. Is there any target for yields for the next year and for the years after that?

A: We are working on a lot of good varieties and running varietal programmes across 28 mills of the country. We have had 30 varieties under trial and a few look very promising. The current average yield of cane is about 71-72 tonnes per hectare; the target is to increase this to at least 80-85 tonnes per hectare.

Q: Government officials reportedly said ISMA's estimates should be taken with a pinch of salt as these tend to deviate as the season progresses and we have seen it happen in the last two years. What is your response?

A: They said ISMA has given an estimate and that they hope it turns out to be right. The agriculture ministry's estimates will also be considered. All of us went slightly wrong last year. But in the last 10 years, barring a couple of years, ISMA's estimates have been almost bang on.

Q: Could new agritech initiatives help with yield estimates?

A: Agritech is to provide better data for farmers. It will help us assess acreage and could help with yield estimation, which is traditionally harder to measure.

(Agri-Stack is India's digital infrastructure initiative to create a unified, data-centric ecosystem for the agriculture sector, aiming to enable better monitoring, procurement efficiency, and payments to farmers, while also helping government to better plan and implement agricultural policies.)

Q: Why do you think the government has been resistant to raise the minimum selling price for sugar?

A: The reasons are best known to the government. The minimum selling price is a floor price, ensuring sugar prices don't fall below production cost. When cane payments are fixed by the government, prices should not fall below cost.

Q: Government officials argue that MSP is not needed as current prices are already higher than the minimum selling price of INR 31 per kg.

A: At the moment, yes, market price is better than minimum selling price. Prices in Maharashtra are at about INR 39 per kg, while those in Uttar Pradesh are at INR 40.5 per kg. But in December 2024, prices in Maharashtra and Karnataka fell to INR 33-34 per kg, below the cost of production. If next year's production is high and exports aren't allowed timely, prices could decline again. Anything below INR 36 per kg would be a problem. Next year, the fair and remunerative price for cane is INR 355 per 100 kg, and INR 40 per kg is the cost of production. Prices dipping below INR 36 per kg would be a big concern.

Q: Do you feel distilleries will bid well for ethanol supply at current prices? What is the sentiment in the market?

A: I don't know about that. I can't speculate on behalf of individual mills or individual distilleries. But I would say that I am hoping, and have requested the government, to at least give us 4.5-4.75 billion litres of allocation if the offers are there so that a healthy balance of sugar is maintained in the country.

I have very clearly said that if there is no proper diversion, it becomes a bigger problem for the industry as the world market is not ready to accept a huge amount of sugar from us. Around 2 million tonnes is still acceptable. But that balance is required - 4.5 million tonnes of diversion for ethanol, 2 million tonnes for exports, and the remaining 28.5 million tonnes of domestic consumption along with a healthy closing stock of about 5-5.5 million tonnes. This will be an ideal scenario for the industry, assuring timely cane payments to farmers too. End

Edited by Avishek Dutta

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