India likely to keep sugar exports restricted amid rising domestic prices and ethanol ambitions

India is expected to remain cautious about resuming sugar exports in the 2026/27 marketing year as the government seeks to contain both food and fuel inflation. Uneven monsoon rainfall and a sharp rise in domestic sugar prices are adding to the pressure, with ex-mill prices in Maharashtra climbing 12% over the past month to more than INR 42,000 per ton.

The greatest concern is eastern Maharashtra, where below-average rainfall could reduce sugarcane acreage in the 2027/28 season. Meanwhile, weather conditions remain favorable in key sugar-producing regions such as North Karnataka and western Uttar Pradesh, supporting crop development.

The Indian government continues to promote ethanol production as part of its strategy to reduce dependence on imported energy. Key initiatives include raising ethanol blending rates in gasoline, expanding the use of flex-fuel vehicles, and investing in fueling infrastructure. However, wider adoption has been slowed by consumer concerns over lower fuel efficiency and compatibility issues with older vehicles.

Analysts note that sugarcane-based ethanol production has remained at 3–4 bln liters for the past five years, despite installed capacity of up to 9 bln liters. At the same time, corn acreage is down by about 10% this season, potentially creating room for greater use of sugarcane in ethanol production. However, the government is also considering greater use of surplus rice stocks as a feedstock for biofuel.

Further growth in sugarcane ethanol production is expected to depend on government pricing policy. Prices paid for ethanol made from cane juice and B-heavy molasses have remained unchanged for nearly four years, while domestic sugar prices have risen significantly. As a result, sugar mills currently have limited financial incentive to divert more sucrose from sugar production to ethanol.

Tags: sugar, India, biofuel