India’s aggressive push for ethanol blending, reaching a 20% target in March 2025 and aiming for 30% by 2030, is reshaping the sugar market nationwide. Implemented under the Ethanol Blending Programme (EBP) since the 2000s, this policy diverts sugarcane from sugar production to ethanol, primarily in states like Uttar Pradesh and Maharashtra. Retail sugar prices have surged from ₹40/kg in May 2023 to ₹45/kg by May 5, 2025, as reduced sugar availability pinches consumers.
In This Article:
Ethanol Boom and Sugar Squeeze
The EBP’s success, with ethanol supply soaring from 40 crore litres in FY14 to 670 crore litres in FY24, has tightened sugar stocks. India, the world’s second-largest sugar producer, saw production drop 12% to below 27 million metric tons in 2025 due to ethanol diversion and climate-driven cane shortages. The government’s lifting of bans on using sugarcane juice and B-heavy molasses for ethanol fueled this shift, but declining cane yields—hit by red-rot disease and erratic rainfall—have intensified the supply crunch. X posts reflect consumer frustration, with users noting, “Sugar prices are crazy now, all because of ethanol.”
Economic and Environmental Trade-Offs
Ethanol blending reduces India’s oil import bill by $4 billion annually and cuts CO2 emissions by 544 lakh metric tons since 2014, supporting clean energy goals. However, diverting 40–45 lakh tonnes of sugar for ethanol in 2024–25 has sparked food security concerns. The Centre’s hike in sugarcane’s Fair Remunerative Price to protect farmers further drives sugar costs, hitting low-income households hardest. To address shortages, the government is exploring grain-based ethanol, with maize and rice as alternatives, though this risks inflating food prices further.
Future Outlook
With sugar prices in Uttar Pradesh exceeding ₹40,000/ton and Maharashtra at ₹37,000/ton, the food vs. fuel debate intensifies. The World Bank predicts a potential 8% price drop by late 2025. Balancing energy security with affordable food requires innovative policies, like AI-driven crop forecasting or diversified feedstocks. For now, India’s ethanol ambition is sweet for sustainability but bitter for sugar affordability.
-By Manoj H
