NEW DELHI — India is weighing restrictions on the amount of sugarcane used for ethanol production, a move designed to increase the nation's sugar output and ease record prices. Government and industry sources said the measure could add approximately 3 million metric tons of sugar to domestic supplies.
The potential policy shift comes as concerns mount over next year's harvest. Reduced rainfall in Maharashtra and Karnataka, India's largest sugarcane-producing states, has prompted officials to consider prioritizing sugar output.
A decision is expected by the end of September. New Delhi aims to boost domestic supplies and avoid sugar imports, which would further strain global markets.
Under the proposed plan, sugar mills would be asked to halt ethanol production from sugarcane juice and B-heavy molasses, using C-heavy molasses — a byproduct with lower sugar content — for ethanol instead.
The government's existing program to blend 20 percent ethanol into petrol would remain on track. Officials said they anticipate increasing the use of corn and rice for ethanol production to compensate for reduced sugarcane-based output, citing ample stocks of both grains.
Sugar prices in India have climbed about 10 percent over the past month, reaching a record high. New Delhi previously banned sugar exports and imposed stock limits on dealers to manage supplies.
Industry officials said the new curbs would not significantly harm sugar mills, expecting them to generate greater revenue from producing and selling sugar than from diverting sugarcane to ethanol under current market conditions.
Mills currently divert about 10 percent of total sugar output to ethanol production, accounting for roughly 3 million metric tons annually. The proposed restrictions would redirect a similar volume back to edible sugar production.
The final ethanol allocation for the marketing year, which begins in November, is set for release before the season starts. State fuel retailers will then issue tenders for ethanol purchases reflecting the updated policy.
