Sugar Price Rise and Ethanol Blending Policy (Economy)
Sugar Price Rise and Ethanol Blending Policy (Economy)
Why In News:
Recently, the sharp rise in sugar prices has triggered a discussion over whether the increase is primarily due to government policy-related factors or the growing dependence of India's ethanol-blending programme on grain-based feedstocks such as maize.
Sugar and Ethanol Link
Sugar is produced primarily from sugarcane, making the industry sensitive to rainfall, irrigation, water availability, pests and crop yields.
Sugarcane production was around 500 million tonnes in the 2025–26 season according to the Third Advance Estimate.
Sugarcane can be used to produce both sugar and ethanol, creating an important linkage between the two sectors.
Ethanol can be produced from sugarcane juice, syrup and molasses, as well as from grain-based feedstocks such as maize.
Therefore, the choice of ethanol feedstock can influence the amount of sugarcane-derived material available for sugar production.
Ethanol Blending and Sugar Prices
Sugar diversion towards ethanol declined from around 12% in 2022–23 to about 9% in 2025–26.
At the same time, grain-based feedstocks, particularly maize, have gained a larger role in India's ethanol production.
Nearly three-fourths of ethanol production now comes from grains.
This shift reduces the dependence of ethanol production on sugarcane and molasses, helping retain more sugarcane-derived material for sugar production.
Ethanol Blended Petrol (EBP) Programme
The Ethanol Blended Petrol (EBP) Programme promotes the blending of ethanol with petrol.
Ethanol is a renewable biofuel that can be produced from agricultural feedstocks such as sugarcane, molasses and grains.
Key Objectives:
Reduce dependence on imported crude oil.
Reduce the country's oil import bill and foreign-exchange outgo.
Provide an additional market for agricultural produce.
Promote the use of domestically produced biofuels.
E20
E20 refers to petrol blended with 20% ethanol by volume.
India achieved the 20% ethanol-blending milestone ahead of the earlier 2030 target.
The expansion of grain-based ethanol has increased the importance of crops such as maize in India's biofuel economy.
Regulatory Framework for Sugar
The Essential Commodities Act, 1955 provides the legal framework for regulating the production, supply and distribution of essential commodities.
It empowers the government to take measures such as stock limits when necessary to prevent excessive stocking and protect consumer interests.
Sugarcane and sugar mills are regulated through the Sugarcane (Control) Order, 1966, issued under the Essential Commodities Act.
The Order provides the regulatory framework for matters relating to sugarcane pricing and supply to sugar mills.