The Indian Sugar and Bio-Energy Manufacturers Association (ISMA) has flagged concerns over a reduction in ethanol allocation from sugar-based feedstocks, warning that it could trigger surplus sugar stocks, underutilized distilleries, and delayed payments to farmers in the 2025-26 sugar season.
According to ISMA, only 289 crore litres of ethanol have been allocated from sugar-based feedstocks under the Ethanol Supply Year (ESY) 2025-26, accounting for just 28% of the total requirement, while 72% (760 crore litres) have been assigned to grain-based ethanol. The association said this imbalance could curb sugar diversion to ethanol, leading to excess sugar stocks and worsening liquidity challenges for mills.
“Under the Ethanol Supply Year (ESY) 2025-26, only 289 crore litres of ethanol have been allocated from sugar-based feedstocks, accounting for just 28% of the total requirement, while grain-based ethanol has been allocated 72% (760 crore litres),” the ISMA statement said.
The association also highlighted a growing pricing gap that threatens ethanol production viability. While the Fair and Remunerative Price (FRP) of sugarcane has risen by 16.5% since 2022-23, ethanol procurement prices from sugarcane juice and B-heavy molasses remain unchanged, creating an unviable cost-price gap of around Rs 5 per litre.
“The cost of production of ethanol stands at Rs 66.09 per litre from B-heavy molasses and Rs 70.70 per litre from sugarcane juice. However, the current procurement prices of Rs 60.73 and Rs 65.61 per litre, respectively, result in an unviable pricing gap of around Rs 5 per litre,” the statement added.
ISMA further pointed out that the Minimum Selling Price (MSP) of sugar has remained at Rs 31/kg since 2019, while production costs have climbed to Rs 40.24/kg. With domestic sugar prices declining and expected to fall further by December, the association warned of mounting cane arrears and heightened financial stress in the sector.
To address these issues, ISMA urged the government to rebalance ethanol allocations in line with NITI Aayog’s roadmap, revise ethanol prices to reflect current production costs, and increase the sugar MSP in line with higher FRP and production expenses. The association also called for early announcements on export policies for 2025-26 to manage surplus stocks and ensure liquidity.
“Timely government intervention is crucial to safeguard farmer welfare, maintain industry stability, and support India’s green energy and Net Zero goals,” ISMA stated.
