India restricts ethanol production from sugarcane as sugar output declines

New Delhi: The Centre is set to restrict the use of sugarcane juice, syrup and B-heavy molasses for ethanol production amid a sharp decline in sugar output in the country.

The restrictions will come into effect from the 2026-27 ethanol supply year, which begins in November. The Centre is expected to issue a notification on the move soon as part of efforts to ensure adequate sugar availability in the domestic market.

Sugar production has been severely hit by drought in Maharashtra and Karnataka, the country's major sugarcane-producing states. Production in the 2025-26 season was 30.6 million tonnes, around 11 per cent lower than the initial estimates, with further decline expected in the coming months.

Last year, around 3 million tonnes of sugar, accounting for nearly 10 per cent of the country's total production, was diverted for ethanol production. The country's carryover sugar stocks at the beginning of the new sugar season on October 1 stood at only 3.75 million tonnes, down from 5 million tonnes a year earlier.

The restriction on using sugarcane-based products for ethanol production will allow mills to use the available sugarcane entirely for sugar production, helping shore up domestic supplies.

E20 blending target unaffected
The move will not affect the country's E20 programme, under which ethanol is blended with petrol at a 20 per cent rate.
Around three-fourths of the ethanol currently produced in India comes from grains, including maize. The share of sugar diverted for ethanol production has also declined from 12 per cent in 2022-23 to 9 per cent in 2025-26.