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3 min read | Updated on September 02, 2025, 16:30 IST
SUMMARY
Sugar stocks: The sharp rally in the stocks could be attributed to the fact that the government on Monday permitting sugar mills and distilleries to produce ethanol without any quantitative restrictions in the 2025-26 marketing year starting in November.
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Shares of Dhampur Sugar Mills were trading 10% higher at ₹138.80 apiece on the NSE. | Image: Shutterstock
The sharp rally in the stocks could be attributed to the fact that the government on Monday permitted sugar mills and distilleries to produce ethanol without any quantitative restrictions in the 2025-26 marketing year starting in November.
Ethanol Supply Year (ESY) runs from November to October.
"Sugar mills and distilleries are allowed to produce ethanol from sugarcane juice/sugar syrup, B-heavy molasses as well as C-heavy molasses during ESY 2025-26 without any restrictions," the food ministry said in a notification.
It said the department, in consultation with the petroleum ministry, would periodically review the diversion of sugar to ethanol production in order to ensure a smooth supply of sweetener in the domestic market.
During the current ESY 2024-25, the government has permitted the diversion of 40 lakh tonnes of sugar for ethanol production.
The Centre has been promoting blending of ethanol in petrol under the Ethanol Blended Petrol (EBP) programme.
Public sector oil marketing companies (OMCs) sell ethanol blended with petrol.
During the ongoing ESY 2024-25, OMCs have achieved an average ethanol blending of 19.05% as of July 31, 2025.
The National Policy on Biofuels 2018, as amended in 2022, inter alia advanced the target of 20% blending of ethanol in petrol from 2030 to ESY 2025-26.
The sugar industry on Tuesday welcomed the Centre's decision to remove quantitative restrictions on ethanol production from sugar for 2025-26, terming it a "jackpot for farmers" that will ensure timely cane payments and help keep sweetener prices under control.
The Food Ministry on September 1 issued a notification lifting the 4 million tonne cap on sugar diversion for ethanol production that was in place for the 2024-25 Ethanol Supply Year (ESY).
For ESY 2025-26, there will be no restrictions on ethanol production from sugarcane juice, sugar syrup, B-heavy molasses, or C-heavy molasses. This is in line with the Sugar (Control) Order 2025.
"It is a positive development considering higher sugar production next year. About 5 million tonnes of sugar can be diverted for ethanol in 2025-26," Indian Sugar and Bio-Energy Manufacturers Association (ISMA) Director General Deepak Balani told PTI.
The move will help mills keep sugar stocks in balance as well as check prices and ensure timely cane payment to farmers, Balani added.
Shares of Dhampur Sugar Mills ended 11.43% higher at ₹140.20 apiece on the NSE, and Balrampur Chini Mills ended at ₹566, up 4.50%. Triveni Engineering and Industries shares settled at ₹359.55, up 2.82%, while Shree Renuka Sugars ended at ₹32.56, up 13.09%.
The Indian cane sugar market size is estimated at $55.40 billion in 2025 and is projected to reach $65.78 billion by 2030, growing at a 4.05% CAGR from 2025 to 2030. Consistent government mandates on ethanol blending, abundant domestic cane supplies, and steady demand from food processors underpin this growth path, said a report by Mordor Intelligence.
"Mills are diversifying into biofuel production, stabilising cash flows, and reducing exposure to volatile wholesale prices. Investments in precision farming and micro-irrigation are increasing cane yields while reducing water use, thereby strengthening raw-material security for the Indian cane sugar market," the report added.
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