ISMA seeks price revision, balanced ethanol allocation & blending roadmap

The Indian Sugar and BioEnergy Manufacturers Association (ISMA) has urged the government to urgently revise ethanol procurement prices and rebalance feedstock-wise allocations under Cycle-2 of the Ethanol Supply Year (ESY) 2025–26, warning that the current framework risks undermining the sugar-ethanol ecosystem and farmer payments.

ISMA highlighted that while the Fair and Remunerative Price (FRP) of sugarcane has risen by 16.5%—from Rs 305 per quintal in 2022–23 to Rs 355 per quintal for 2025–26—ethanol procurement prices for sugarcane-based feedstocks such as sugarcane juice (SCJ) and B-heavy molasses (BHM) have remained unchanged for three years. This has resulted in a widening cost-price gap of nearly Rs 5 per litre, making ethanol production from these feedstocks financially unviable.

According to ISMA, the cost of producing ethanol from BHM is about Rs 66 per litre against a procurement price of Rs 60.73 per litre, with a similar gap for SCJ-based ethanol. When benchmarked against government-determined pricing formulas, the gap widens further, placing severe pressure on mill liquidity and timely cane payments to farmers.

ISMA Director General Deepak Ballani cautioned that unless procurement prices are revised, sugar mills will reduce diversion of excess sugar towards ethanol, leading to surplus sugar stocks, depressed domestic prices, and increased financial stress across the value chain.

The Association also flagged a sharp imbalance in ethanol allocations. Despite NITI Aayog’s roadmap projecting a 55% contribution from the sugar sector to meet E20 blending targets, sugar-based ethanol has been allocated just 289 crore litres—only 28% of the total—under ESY 2025–26, while grain-based ethanol accounts for 72%. This, ISMA said, could push distillery utilisation below 50%, strand investments worth over Rs 40,000 crore, and increase dependence on food grains.

To restore balance, ISMA has called for reserving at least 50% of ethanol allocations for sugar-based feedstocks and allocating 150 crore litres from SCJ and BHM in Cycle-2, in line with national blending goals and rural sustainability objectives.

ISMA Demands for GST Rationalisation on Flex-Fuel Vehicles

The issue of GST rationalisation for flex-fuel vehicles and higher ethanol blends should be taken up in the forthcoming Union Budget to promote clean mobility and ensure stability in the ethanol ecosystem, recently stated Deepak Ballani. He noted that flex-fuel and strong hybrid vehicles currently attract a GST rate of around 18%, and called for it to be reduced to 5%, bringing them at par with electric vehicles.