NEW DELHI: The government may allow sugar export in view of a glut in the domestic market and the risk of non-payment to farmers.
Sugar Industry body warns of risk of farmers' payment after the government has allocated a lesser offtake of sugar-based ethanol over grain-based ethanol in the ongoing sugarcane season 2025-26 to achieve blending with fuel up to 20% (E20).
Under the Ethanol Supply Year 2025–26, the Government has allocated 289 crore litres of ethanol from sugar-based feedstocks, accounting for 28% of the total requirement, while grain-based ethanol has been allocated 72% (760 crore litres).
The industry body claimed that the sugar industry has invested over Rs 40,000 crore in setting up more than 900 crore litres of ethanol capacity, as per NITI Aayog’s 2020-25 Biofuel Roadmap.
The Indian Sugar and Bio-energy Manufacturers Association (ISMA) demanded a rebalance of ethanol allocation, with at least a 50% share, to make sugar industry distilleries economically viable.
The industry body denied the allegation that grain-based offtake increased in view of the Bihar election.
Meanwhile, the government has responded to the claim, saying that the government's decision was based on last year's experience.
“The sugar industry offered to supply 471 crore litres of ethanol from molasses in the 2024-25 ethanol supply year ending October, but only delivered 289 crore litres,” said Sanjeev Chopra, Secretary, Department of Food and Consumer Affairs.
According to the government, sugar production for 2025-26 is expected to reach 34 million tonnes(mt) against the annual domestic demand of 28.5 mt.
As of the end of the 2024-25 sugar season (which runs from October to September), India carried over a surplus of around 5.2 to 5.4 mt of sugar into October 2025.
This was higher than anticipated, largely due to lower-than-projected sugar diversion for ethanol production and lower-than-allowed exports.
Experts say India may end up with around 8 mt of surplus sugar at the end of the ongoing season.
“The surplus sugar may depress domestic price, which may impact revenue and which in turn impact farmers' repayment,” said Deepak Ballani, Director General of ISMA.
He also urged the government to announce the sugar export policy for 2025-26 early to help manage surplus stocks.
Sensing the possibility of a glut in the domestic market, the government is considering allowing ethanol exports and higher diversion. "We are definitely having a surplus of sugar, and we are considering allowing exports," said Chopra.
The Government has hinted that a decision related to exports will come soon to give a longer window for the sugar industry to plan exports.
A committee of ministers is likely to meet next week to decide on the issue. India exported about 8,00,000 tonnes of sugar against an allocation of 1 million tonnes during the 2024-25 marketing year.
