Government to Stop Using Sugarcane Juice and B-Heavy Molasses for Ethanol in 2026-27: Why Sugar Supply Comes First
The Union government is set to stop sugar mills from using sugarcane juice, sugar syrup and B-heavy molasses to make ethanol in the 2026-27 Ethanol Supply Year (ESY), which begins on 1 November 2026. Ethanol made from C-heavy molasses (the last, low-sugar leftover) will still be allowed.
The reason is tight sugar supply. Sugar output for the 2025-26 season was first estimated at 343 lakh tonnes, but was cut to 306 lakh tonnes in August, about 11% lower. Crop diseases, waterlogging and bad weather hurt the cane crop.
After about 30 lakh tonnes of sugar (nearly 10% of output) was diverted to ethanol, net sugar output was only about 279 lakh tonnes. This barely matches India's yearly domestic need of about 280 to 285 lakh tonnes.
Opening sugar stocks for the new season on 1 October 2026 were about 37.5 lakh tonnes, compared with nearly 50 lakh tonnes a year earlier. Dry conditions in Maharashtra and Karnataka, two major cane states, may cut the next crop too.
The share of sugar diverted to ethanol has already fallen from about 12% in 2022-23 to about 9% in 2025-26. Nearly three-fourths of India's ethanol now comes from grains, mainly maize. So experts expect the 20% ethanol blending target to stay achievable even without sugar-based feedstock.
Ethanol Blended Petrol (EBP) Programme
The Ethanol Blended Petrol (EBP) Programme is the Government of India's plan to mix ethanol, a fuel made from plants, into the petrol sold at petrol pumps. "E20" means petrol with 20% ethanol and 80% normal petrol. By mixing in ethanol, India buys less crude oil from abroad, cuts pollution and gives farmers and sugar mills an extra market. India reached about 20% blending in 2025.
The EBP Programme lets mills turn cane juice and B-heavy molasses into ethanol, but that means making less sugar. With weak sugar output and low opening stocks, the government is set to stop these sugar-rich feedstocks for ESY 2026-27, leaving C-heavy molasses and grains to supply ethanol. Because most ethanol now comes from grains, the 20% blending level is expected to hold.
Sugar Sector Regulation in India: Sugarcane (Control) Order, FRP and Minimum Selling Price
India's sugar sector is one of the most closely controlled parts of the economy. The government decides the minimum price that sugar mills must pay farmers for sugarcane, the lowest price at which mills can sell sugar, how much sugar can be exported, and even how much cane or sugar can be turned into ethanol. The aim is to protect two groups at the same time: about five crore cane farmers [Unverified] and crores of consumers who buy sugar every day.
The government is using its sugar sector controls to put domestic sugar supply first. With 2025-26 output about 11% below early estimates and opening stocks down to about 37.5 lakh tonnes, it plans to stop cane juice, syrup and B-heavy molasses from being used for ethanol in ESY 2026-27, so that more cane is turned into sugar for households.
- Restriction applies to ESY 2026-27, starting 1 November 2026: no cane juice, sugar syrup or B-heavy molasses for ethanol
- 2025-26 sugar output: first estimated at 343 lakh tonnes, revised to 306 lakh tonnes in August (about 11% lower)
- Sugar diverted to ethanol in 2025-26: about 30 lakh tonnes (nearly 10% of output)
- Net sugar output after diversion: about 279 lakh tonnes, against domestic need of 280 to 285 lakh tonnes
- Opening stocks on 1 October 2026: about 37.5 lakh tonnes (nearly 50 lakh tonnes a year earlier)
- Share of sugar diverted to ethanol: about 12% (2022-23) to about 9% (2025-26)
- Nearly three-fourths of India's ethanol now comes from grains, mainly maize
- Earlier similar step: December 2023 ban on cane juice for ethanol, then a 17 lakh tonne cap for ESY 2023-24; cap removed from 1 November 2024
- Sugarcane FRP for 2026-27: ₹365 per quintal