India may restrict sugar export as likely to allow higher ethanol blending with petrol
India may need to curb sugar exports if ethanol blending rises beyond E20, as per Fitch Solutions. Tighter exports could support global prices but help stabilise domestic markets, especially amid rising cane dues, surplus ethanol capacity, and potential weather risks like El Niño.
Amid Indian ethanol industry lobbying for a higher blending beyond 20 per cent, a global agency has said that any hike from E20 level will require India to ban sugar export, potentially helping the government to control domestic prices when global rates are predicted to jump in April-June quarter.
“India, having achieved E20, appears increasingly likely to pursue a further expansion of its ethanol mandate. While India has capacity for further ethanol expansion, realising it will require the country to further restrict sugar exports, weighing on global supply and underpinning prices at the margin,” BMI, a unit of Fitch Solutions, has said in a report on ‘outlook for sugar prices’.
India had faced a sugar shortage in 2022-23 season as a result export was restricted and despite a bumper output in 2023-24, no shipment was permitted.
In 2024-25, the country exported 9 lakh tonnes (lt) of permitted 10 lt whereas in current season (October-September), the government has allowed 15.9 lt so far out of which over 3.6 lt have been exported till March-end.
Industry sources said that the government is concerned about ₹16,918 crore of sugarcane dues (to be paid to farmers by mills) have piled up till end of March in current crushing season that started from October 1, 2025.
“Though 84 per cent of ₹1.07 lakh crore of dues has been cleared by mills, the arrear in terms of the absolute number is still a concern, when there is scope for getting more ethanol from sugar factories,” an industry official said.
He also pointed out that oil marketing companies (OMCs) had placed order for only 288.51 crore litre of ethanol in cycle 1 from sugar factories whereas they have a combined capacity to produce nearly 1,000 crore litre annually. Out of the order received by them, 46 per cent of the ethanol has been supplied until March 15, sources said.
In comparison, the grain-based units have supplied 31 per cent of 759.75 crore litres worth supply orders received.
According to the BMI report, the global sugar price having averaged US cent 14.6/lb (of 0.454 kg) in the first quarter of CY2026 (January-March), there may be a gradual recovery, with quarterly averages projected at USc16.2/lb in Q2 (April-June), USc16.6/lb in Q3 (July-September) and USc17.2/lb in Q4 (October-December. The annual average for CY2026 is seen at US cent 16.2/lb.
The report has also expressed concern over likely impact of El Nino on Indian sugar comparing it with 2023 (when monsoon rainfall was 6 per cent deficient), resulting in lower sugar production in 2024-25 season. India’s sugar production in 2024-25 season had dipped to 261 lt from 320 lt in 2023-24.
“The historical evidence for this transmission mechanism is wel established: the 2023-24 El Niño
coincided with an estimated 9% decline in Indian sugarcane production and a projected 15 per cent reduction in Thai output, driving global sugar prices to their highest level since 2011,” BMI said.
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Source : The Hindu Business line
