Sugar Stocks Rally as Centre Lifts Ethanol Production Curbs

Sugar stocks lit up Dalal Street on September 2 after the government scrapped limits on ethanol production from sugarcane derivatives for the upcoming marketing year.

The Ministry of Consumer Affairs, Food & Public Distribution announced that, starting November 1, 2025, mills and distilleries will be free to produce ethanol from sugarcane juice, syrup and all types of molasses without quantitative restrictions. The move marks a reversal from the current year, when the Centre had tightened controls in response to weaker sugarcane supplies.

Investors cheered the development, sending sugar stocks sharply higher. Shree Renuka Sugars surged over 12% while Uttam Sugar Mills jumped by a similar margin. Balrampur Chini Mills gained more than 7% and Bajaj Hindusthan Sugar, Godavari Biorefineries, Dhampur Sugar Mills and Magadh Sugar & Energy advanced between 8-10%. Triveni Engineering rose 4.5%, with Dwarikesh Sugar and other peers also trading firmly in the green.

The ministry said the Department of Food and Public Distribution would periodically review sugar diversion to ethanol, to safeguard domestic sugar availability through the year. Ample monsoon rains over two consecutive seasons have encouraged farmers to expand cane acreage, giving the government confidence that supply constraints will ease in 2025-26.

The move aligns with India’s push towards cleaner fuels. Under the Ethanol Blended Petrol (EBP) programme, public sector oil marketing companies have achieved an average blending of 19.05%  in the current ethanol supply year, which runs from November to October. The government has already preponed its target of 20% blending from 2030 to 2025-26, under the amended National Policy on Biofuels.

Adding to the backdrop, the Supreme Court on Monday dismissed a plea challenging the nationwide rollout of 20% blended petrol. The court sided with the Centre’s argument that the policy would benefit farmers, conserve foreign exchange and reduce India’s dependence on imported oil.

For sugar companies, the removal of ethanol production caps promises a stronger revenue stream, especially as demand from oil marketing companies continues to rise.