India sugar stocks slide as government halts sugarcane-based ethanol diversion

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The ​latest ethanol ‌tender excludes supplies produced from sugarcane juice, ‌sugar syrup ​and B-heavy molasses, cutting ⁠off an important higher-margin outlet for ‌sugar mills

By Reuters

Updated - October 19, 2026 at 10:25 AM.

​Indian sugar ‌stocks fell in ​early trade after ⁠the government directed oil marketing ‌companies to reduce sugar ‌diversion for ‌ethanol ⁠production. | Photo Credit: iStockphoto

​Indian sugar ‌stocks fell in ​early trade after ⁠the government directed oil marketing ‌companies to reduce sugar ‌diversion for ‌ethanol ⁠production to ⁠zero for the 2026/27 supply year.

The ​latest ethanol ‌tender excludes supplies produced from sugarcane juice, ‌sugar syrup ​and B-heavy molasses, cutting ⁠off an important higher-margin outlet for ‌sugar mills.

Balrampur Chini Mills, EID Parry, Triveni Industries, Bajaj Hindusthan ‌Sugar, Shree Renuka ​and Dhampur Sugar fell ⁠between 2 per cent and 6 per cent ⁠in morning trade.

The decision limits companies' ability to shift cane and molasses between sugar and ethanol depending ‌on market conditions, potentially weakening margins ​and reducing the return on ethanol-capacity investments.

The move is ⁠aimed at increasing domestic sugar availability and easing record high prices in ‌India, the world's biggest sugar consumer.

Sugar prices have risen more than 10% amid the festive season, raising concerns over near-term food price pressures before the main crushing ‌season begins, said Siddhartha Khemka, head of research ​of wealth management at Motilal Oswal Financial Services.

The decision reflects ⁠the government's priority of protecting food supplies ⁠after concerns that weak rainfall in key producing states ‌could curb output, analysts from Motilal Oswal and Choice Broking added.

Published on October 19, 2026

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