Sugar industry demands better ethanol pricing & procurement support

The ethanol production from grain-based sources has outpaced that from sugar-based feedstocks big way in India, triggering alarm within the sugar industry. Recently, the sugar industry leaders have appealed to the central government for a revision in ethanol procurement prices and financial support for technological advancements.

The concerns were raised by the sugar industry during a recent meeting of the National Federation of Cooperative Sugar Factories (NFCSF) held in Pune, Maharashtra. Industry representatives highlighted the growing pressure on sugar mills, many of which have made substantial investments in ethanol production infrastructure, now threatened by shifting production trends.

According to data presented at the meeting, grain-based ethanol output is projected to reach 650 crore litres in 2024-25, compared to 250 crore litres from sugar-based sources. This marks a dramatic turnaround from 2017-18, when sugar was the primary raw material for ethanol production and grain-based output was negligible.

The rise in grain-based ethanol comes amid India’s intensified push for ethanol blending with petrol as part of its energy transition strategy. However, the growing dependence on food grains for ethanol has sparked concerns over food security and the potential impact on essential grain prices.

Harshvardhan Patil, President of NFCSF, said, “The sharp increase in grain-based ethanol production has created a challenge for sugar mills, which have invested heavily in ethanol infrastructure. We are urging the central government to revise procurement prices to ensure sugar mills remain competitive and viable.”

Patil noted that although the sugar industry is capable of diverting up to 40 lakh metric tonnes of sugar for ethanol production this year, only 32 lakh metric tonnes were utilized. “With sugar prices performing well in the domestic market, many mills have prioritized sugar production over ethanol,” he explained. In many cases, market forces are now playing a larger role than government incentives.

The federation has also called for central assistance to help sugar mills adopt flexible production technologies. Such upgrades would enable plants to seamlessly switch between sugar and ethanol production in response to market demand.

The NFCSF mentioned that without the necessary technological adaptation, the sugar industry’s ability to respond to fluctuating market dynamics will be severely limited.

A report released last April by the Grain Ethanol Manufacturers Association (GEMA) revealed that grain-based ethanol could help India save over Rs 1.28 lakh crore in foreign exchange between 2025 and 2030. As India continues to recalibrate its ethanol blending strategy, balancing energy goals with food security and industry sustainability will remain a key policy challenge.