ISMA says low ethanol orders may cause cane arrears, surplus sugar stocks
This story was originally published at 19:11 IST on 29 October 2025
Register to read our real-time news.Informist, Wednesday, Oct. 29, 2025
--ISMA: Sugar sector currently supplying only 28% of ethanol orders
--CONTEXT: ISMA Director General Ballani's comments at a press conference
--ISMA seeks orders for 1.5 bln ltr ethanol from cane feedstock in next cycle
--ISMA: Current ethanol orders need only 3.2-3.4 mln tn sugar diversion
--ISMA: Had hoped for sugar diversion of 4.5-5.0 mln tn in 2025-26
NEW DELHI – The Indian Sugar & Bio-Energy Manufacturers Association has raised concerns that lower ethanol supply orders from sugarcane-based feedstocks could lead to underutilisation of distilleries, reduced sugar diversion, surplus stocks, and a buildup of cane arrears during the 2025–26 (Oct-Sep) sugar season.
In the upcoming ethanol supply year 2025–26 (Nov-Oct), only 2.89 billion litres of ethanol have been allocated from sugar-based feedstocks, accounting for just 28% of total allocation. In contrast, grain-based ethanol has received 72% or 7.60 billion litres of ethanol orders, creating a "sectoral imbalance" in the government's ethanol blending programme, ISMA said.
This was not always the case. From 2019-20 to 2022-23, about 70-90% ethanol was produced from sugarcane-based feedstocks. However, from 2023-24 onward, the sugar sector's share in the ethanol blending programme has consistently declined, while grain-based feedstocks like maize and rice have risen.
ISMA said the current allocation is "insufficient" as the industry only needs to use 3.2 million-3.4 million tonnes of sugar to produce 2.89 billion litres. The association had hoped to divert 4.5 million-5.0 million tonnes of sugar for ethanol as an avenue to offload its surplus sugar output.
In the 2024-25 ethanol supply year, distillers had supplied about 3.07 billion litres of ethanol from sugar-based feedstocks as of Sept. 30. According to ISMA officials, sugar diversion in 2024-25 is estimated at 3.5 million tonnes.
Sugar diversion was weak in 2024-25 due to lower sucrose availability amid a decline in sugarcane yields. Sugar production in 2024-25 was only 26.1 million tonnes, down 17% from 2023-24. According to ISMA, lower sugar output and export opportunities in 2024-25 had helped mills financially despite weak sugar diversion.
ISMA has sought allocation of an additional 1.5 billion litres of ethanol from sugarcane-based feedstock in the next cycle to ensure sectoral balance, support sugar prices, and prevent a market crisis, its Director General Deepak Ballani said.
"Underutilisation of capacity below 50% will leave assets idle, delay loan repayments, and cause payment defaults to farmers," Ballani said. ISMA estimated that lower ethanol revenues could aggravate cane payment delays, leading farmers to move away from sugarcane cultivation in the long run.
To offload surplus stocks, ISMA has urged the government to allow exports of 2.0 million tonnes in 2025-26. In 2024-25, the government had permitted exports of 1.0 million tonnes of sugar by September, of which about 800,000-900,000 tonnes were shipped out.
Citing rising cane prices and other production costs, ISMA urged the government to revise ethanol procurement rates. The cost of producing ethanol is INR 66.09 per litre from B-heavy molasses and INR 70.70 per litre from sugarcane juice. However, the current procurement prices of INR 60.73 and INR 65.61 per litre, respectively, result in an "unviable pricing gap" of around INR 5 per litre, ISMA said.
On sugar pricing, ISMA said the current minimum selling price of sugar at INR 31 per kg, unchanged since February 2019, is unsustainable given the sharp rise in input costs. It estimated the production cost for 2025–26 at INR 40.24 per kg and demanded that the minimum selling price be raised accordingly. End
Reported by Afra Abubacker
Edited by Saji George Titus
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2025. All rights reserved.
To read more please subscribe
Share this Story:
