Food Secy hints at sugar exports capping to bolster ethanol production

The government may impose a cap on sugar exports if the sanctioned quota is not fully utilised, with excess stocks likely to be diverted towards ethanol production or retained as closing inventory, Food Secretary Sanjeev Chopra said.

Speaking on the sidelines of ISMA SugarNXT 2026 in New Delhi, the food secretary indicated that unexported sugar would either be redirected for ethanol blending or added to domestic stockpiles.

Earlier, the government had approved the export of 1.5 million tonnes of sugar for the current season, but shipments have faced headwinds due to export parity challenges. Although global sugar prices have shown an upward trend—partly influenced by geopolitical tensions in West Asia—uncertainty remains over whether the entire quota will be exported.

To manage surplus supplies, the government is increasingly relying on its ethanol blending programme, which has become a key policy lever. India has already achieved 20% ethanol blending in petrol, and discussions are underway to further raise this target. Chopra noted that a multi-ministerial committee, comprising representatives from the petroleum, food, and heavy industries ministries, is evaluating options to expand blending levels and explore alternative uses for surplus ethanol capacity.

India’s ethanol production capacity currently stands at around 2,000 crore litres, creating scope for additional utilisation avenues such as flex-fuel vehicles. Since 2014-15, the ethanol blending programme has helped the country save approximately ₹1.65 lakh crore in foreign exchange by reducing crude oil imports.

On the domestic front, sugar prices have remained stable, with minimal inflation of around 3% and no expectation of sharp increases. Net sugar production, after accounting for ethanol diversion, is estimated at 320–325 lakh tonnes this season, with about 35 lakh tonnes likely to be diverted.

The government clarified that there is no proposal at present to ban sugar exports. Meanwhile, the industry’s demand for an increase in the minimum selling price is under consideration, with a decision expected at an appropriate time.