India Lifts Restrictions On Ethanol Production; Sugar Mills & Distilleries Can Use Cane Juice For Ethanol

India has lifted its restrictions on sugar mills and distilleries using sugarcane juice to produce ethanol for the 2024-25 season. This policy change marks a significant shift in the country’s approach to managing its sugar production and ethanol industry.

India’s Policy Shift For Ethanol Production

India has lifted regulations for sugar mills and distilleries that use cane juice to produce ethanol; this is expected to prolong export bans from the second-largest producer in the world and restrict supply worldwide. Beginning in November of 2024, ethanol producers will be permitted to utilise B-heavy and C-heavy molasses as well as sugarcane juice. This announcement comes from the Food Ministry. According to the organisation, authorities will reassess the plans regularly to make sure there is a sufficient supply of sugar for home use.

In 2023–24, India halted millers from utilising cane juice and syrup to produce ethanol to boost its sugar stockpiles following crop devastation caused by inclement weather. The country in South Asia likewise imposed export restrictions, which were later renewed in October to contain local prices before the national elections. Since several mills reduced their output predictions due to major fires in Brazil, the world’s biggest producer, benchmark sugar prices have recently increased.

According to a separate ministry decision, the government has also permitted grain-based ethanol producers for fuel to buy rice from state reserves through an electronic auction run by Food Corp. of India. Up to 2.3 million tons are expected to be sold by the country between August and October.

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India’s Sugar Exports

India is a major player in the global sugar trade, and its export volumes can influence global prices. In recent years, India’s sugar exports have helped to alleviate some of the tightness in global supplies. Brazil, the world’s largest sugar producer, too is facing challenges, including competition between sugar and ethanol production, which could limit its ability to fully meet global demand.

For now, India’s policy shift for the 2024-25 season is set to bolster ethanol production while posing challenges for sugar production and exports. As India continues to pursue its ethanol blending targets, the interplay between sugar and ethanol production will remain a critical factor in both domestic and global markets.

Cover image credits: Canva