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Informist, Monday, Oct. 19, 2026

 

MUMBAI – With the restriction on using sugarcane-based feedstocks for ethanol production from November onwards, India is projected to have a net sugar output of 27-28 million tonnes in the sugar season 2026-27 (Oct-Sept), ICRA Ltd. said. Last year, the country had diverted about 3 million tonnes of sugar to produce ethanol, resulting in a net sugar output of 27.6 million tonnes.

 

The government has prohibited distilleries from producing ethanol from most sugarcane-based feedstocks other than C-heavy molasses during the ethanol year 2026-27 (Nov-Oct), to control sugar prices and ensure adequate availability for consumption in an El Nino year. In August, sugar prices had soared to a record high of INR 6,000-6,400 per 100 kg in some markets amid supply concerns.

 

To improve domestic availability ahead of the festival season, the government allowed duty-free imports of raw sugar and prices of the sweetener have since eased. However, sugar prices are rising again amid growing El Nino-related weather risks for sugarcane yields and farmers' protests delaying sugar mills' crushing operations in the sugar season that began Oct. 1.

 

According to ICRA, the government's restriction on diversion of sugar for ethanol production is expected to improve domestic availability and moderate prices to an extent. The average ex-mill price of sugar rose 6% on year to INR 41.5 per kg in 2025-26 (Oct-Sept) from INR 39 per kg in 2024-25, it added.

 

"The profitability of integrated sugar mills with only cane-based distilleries is expected to moderate following the restriction, although prevailing sugar realisations are likely to partly cushion the impact," ICRA said. In contrast, the impact on mills with multi-feed distilleries is expected to be limited, it added. 

 

Factoring in the duty-free import quota opened in August, the ongoing sugar year is estimated to have opened with 4.8 million tonnes as of Oct. 1, ICRA said. With India consuming 28.3 million tonnes of sugar annually, the current year is likely to close with 3.5-4.5 million tonnes as of Sept. 30, 2027, it added. "This would be equivalent to less than two months of consumption, below the historical norm of two to three months."  End

 

Reported by Afra Abubacker

Edited by Himanshi Gupta

 

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