India Considers Limiting Sugarcane Use for Ethanol as Sugar Prices Hit Record High

India is considering restricting the amount of sugarcane diverted to ethanol production in the next season to increase domestic sugar supplies and bring down record-high prices, according to government and industry sources. The move comes amid concerns over weaker sugarcane output following reduced rainfall in Maharashtra and Karnataka, the country’s biggest sugar-producing states.

Indian sugar mills diverted around 3 million metric tonnes of sugar, or roughly 10% of total production, to ethanol during the current season. Restricting cane-based ethanol production could return a similar volume to the sugar market next season, potentially helping India avoid imports as supplies tighten and festival-season demand rises.

To maintain its 20% ethanol blending target for petrol, the government would need to increase the use of corn and rice for ethanol production. Under the proposal, mills could be asked to stop producing ethanol from sugarcane juice and B-heavy molasses and rely mainly on C-heavy molasses instead. A final decision on ethanol allocations is expected before the new sugar season begins in October.

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