Ethanol Allocation Pains: Sugar Industry Faces Financial Strain

The sugar industry is urging for a larger share of ethanol supply contracts for the 2025-26 season due to insufficient allocation, risking financial stress and delayed payments to farmers. Despite significant investment, current allocations to grain-based distilleries overshadow sugar mills, creating potential market disruptions.

The sugar industry has raised alarms over ethanol supply contracts for the 2025-26 season, arguing that current allocations could lead to financial instability and delay payments to cane farmers, as stated by the Indian Sugar & Bio-Energy Manufacturers Association (ISMA) on Wednesday.

Despite investing more than Rs 40,000 crore to establish over 900 crore litres of ethanol capacity, sugar mills received only 28% of the required 1,050 crore litres. This allocation falls short as grain-based distilleries were awarded 72% of the contracts, according to ISMA's report.

ISMA highlighted a policy gap by oil marketing companies leading to disruptions in ethanol allotment. The industry calls for sugar-based feedstocks to get at least 50% of the allocation and demands an increase in the minimum selling price for sugar to counter rising costs and safeguard cane payments.