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Informist, Monday, Sept. 15, 2025

 

By Afra Abubacker

 

NEW DELHI – Faced with forecasts of surplus sugar production and shrinking domestic consumption, India's sugar sector is pinning its future on securing new avenues for ethanol. At the two-day India Sugar and Bio-Energy Conference in the national capital last week, policymakers and industry experts signalled an urgency to expand ethanol usage for blending in petrol, sustainable aviation fuel, and diesel. They are also counting on exports to offload surplus sugar in the global market.

 

Sugar production in 2025–26 (Oct-Sept) is expected to rise 18.3% on year to 34.9 million tonnes against local consumption of 28–29 million tonnes, as per the estimates of the Indian Sugar Mills & Bio-Energy Manufacturers Association. ISMA hopes to divert about 5.0 million tonnes of sugar for ethanol production, up from 3.4 million tonnes in the sugar year 2024–25.

 

Ethanol remained the fulcrum of discussion at the conference. During years of surplus sugar production, mills divert sugar or sucrose to make ethanol, which oil marketing companies blend into petrol. "We are at 19.2% blending on average this year... next year we will achieve uniform blending of 20?ross the country," Joint Secretary (Sugar) Ashwini Srivastava said at the conference Friday, adding that India will require 12 billion litres of ethanol in 2025–26 (Nov-Oct) to sustain the programme.

 

According to the Petroleum Planning & Analysis Cell, ethanol blending averaged 19.1?tween November and July, with July alone at 19.9%. There were media reports about an inter-ministerial committee charting a roadmap for higher blends in the coming years. But the government seems cautious about higher mandates amid rising concerns about fuel efficiency, vehicle compatibility, and food security. There is also growing consumer criticism against the compulsory use of blended petrol.

 

Given this scenario, the industry is concerned about the future amid huge investments already made in distillation capacities. While the government is firm on its ethanol-blending programme, it is flexible with the feedstock used to produce ethanol. "We are finding that sweet sorghum should generate more ethanol per acre as compared to sugarcane," Food Secretary Sanjeev Chopra said Thursday. "We will be having the results on that in October or November."

 

The conference also highlighted the widening ethanol feedstock basket. The government has earmarked 5.2 million tonnes of surplus rice from Food Corp. of India for ethanol production in 2025-26 (Nov-Oct). "We are looking for the optimum mix of feedstocks. Since the upcoming sugar season will be surplus, we are expecting 4.8 million tonnes of sugar diversion," Srivasatava said, adding that most ethanol is made from maize these days.

 

"We have come up with a policy recently that we are increasing the supply of broken rice (for ethanol production) in the open market," he said. The Centre aims to procure 5.0 million tonnes of 10% broken rice compared with the earlier 25%. Millers can pool the remaining undelivered broken grains and sell them to distillers for ethanol production. Meanwhile, the better-quality 10% broken rice will be offered to trade through open market sales. According to industry experts, this initiative is to ensure a steady feedstock channel for ethanol production. There is also the "moral guilt" of using the same quality of food grain in food and fuel, G.K. Sood, chairman, MEIR Commodities, said.

 

Of the 12 billion litres of ethanol required in 2025-26 (Nov-Oct), 60% is expected from grains and 40% from sugarcane. With this shift, many distilleries have converted to dual-feedstock units that can run on both sugarcane and grain. India has been pushing biofuel blending to reduce crude oil imports, promote green mobility, and boost the rural economy.

 

The sugar industry is also keen to bag export opportunities in 2025–26 (Oct-Sept). "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 said.

 

Government officials said the export policy for the sugar year 2025–26 is yet to be decided and will depend on actual sugar production. However, they indicated there is scope for exports, without specifying the likely quantity or timing. "We can say that, considering the available data, there will be scope for export of sugar," Srivastava said.

 

In 2024–25, the government allowed 1.0 million tonnes of sugar exports. "But so far, only 750,000 tonnes of sugar has been exported, and it is expected that only around 800,000 tonnes will be exported during the season," Srivastava said. India exported less sugar than the quota because global prices were not attractive.

 

Goel, however, said that if the government announces its export policy early, the industry can take better export calls as it would have a longer window to secure better prices. In 2024–25, the government had announced the export quota in January. According to ISMA, timely export announcements provide liquidity to the sector and enhance mills' capability to pay farmers on time.

 

Beyond sugar exports, the conference explored new frontiers for ethanol. Road Transport and Highways Minister Nitin Gadkari said trials blending ethanol with diesel were unsatisfactory and the government now plans to try isobutanol. Isobutanol, produced from ethanol through fermentation, offers higher energy density and is less corrosive than ethanol, making it more suitable for blending with diesel. The Automotive Research Association of India is testing a 10% isobutanol blend with diesel. "We tried ethanol with diesel, but the results were not satisfactory. Isobutanol is now under trial as an alternative fuel," Gadkari said.

 

The biofuel industry is eyeing the diesel market as the next breakthrough, as diesel consumption is nearly three times that of petrol. Though electric vehicles are gaining traction, there are few options to reduce carbon emissions in heavy-load vehicles that run on diesel.

 

To secure demand in green mobility, the industry also called for tax parity and incentives for flex-fuel vehicles, which currently attract GST rates of 18–40% compared with 5% for electric vehicles. Without demand-side support, the ethanol programme risks hitting a wall, they said.

 

The most futuristic bets, however, are on sustainable aviation fuel. ISMA Director General Deepak Ballani said Indian ethanol from sugarcane has the lowest carbon intensity globally. "I think we have a huge advantage in terms of offsetting the cost by carbon credits," he said.

 

Sameer Sinha, chief executive officer (Sugar Business Group), Triveni Engineering & Industries Ltd., said technology to produce sustainable aviation fuel is yet to be scaled up commercially. The first plant in the US using the alcohol-to-jet technology of LanzaTech to produce sustainable aviation fuel is expected to go onstream in October. Its success will give India greater confidence to move forward, he said.

 

With improved sugarcane yields and better technologies, India can achieve self-sufficiency for its sustainable aviation fuel mandate and also emerge as a competitive export hub, given its proximity to aviation centres in West Asia and Southeast Asia, Sinha said.

 

With the sugar consumption curve flattening in the domestic market, India's industry is exploring ways to create new demand streams. However, the sector has to overcome credibility challenges and the negative public narrative around its push for biofuels. Earlier this month, the Opposition levelled a conflict-of-interest charge against Gadkari, claiming he has been "aggressively lobbying" for ethanol production as his sons are involved in firms that have "benefited" from government policy.  End

 

Edited by Rajeev Pai

 

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