Sugar Market Remains Stable: NFCSF Forecast

New Delhi – The Indian sugar market is currently stable, and prices are expected to remain steady in the near future, according to a press release issued by the National Federation of Cooperative Sugar Factories (NFCSF).

While the Ethanol Blended Petrol (EBP) program has revitalized the sugar industry, the NFCSF has expressed concern over the declining proportion of sugar diverted for ethanol production. The federation has urged the government to intervene with supportive policies and also demanded an increase in ethanol prices.

Sugar Market and Stock Position

The NFCSF press release states that, as per current estimates, the closing sugar stock for the 2024–25 season will be approximately 48.65 lakh metric tonnes (LMT). This stock is considered sufficient to meet domestic consumption needs during the critical months of October and November 2025, ensuring price stability and uninterrupted supply. Currently, ex-mill sugar prices are stable, ranging between ₹3,880 and ₹3,920 per quintal. This stability is attributed to lower net sugar production, strong market demand, and timely government interventions—notably, the strategic allowance of limited sugar exports and controlled release of monthly domestic quotas, which have effectively balanced supply in the domestic market.

According to NFCSF, key figures for the sugar balance sheet for the 2024–25 season are as follows:

• Opening Stock: 78.55 LMT
• Gross Sugar Production: 293.10 LMT
• Sugar Diverted to Ethanol: 32.00 LMT
• Net Sugar Production: 261.10 LMT
• Total Net Availability: 339.65 LMT
• Actual Dispatches (including exports): 291 LMT
• Closing Stock: 48.65 LMT

Promising Outlook for the Next Season

NFCSF President Harshvardhan Patil stated that the 2025–26 sugar season is expected to witness a strong recovery in production, with estimated gross output reaching up to 350 LMT. This anticipated rebound is due to favourable monsoon conditions and increased sugarcane cultivation in major producing states such as Maharashtra and Karnataka. In addition, the timely announcement of an increase in the Fair and Remunerative Price (FRP) by the Government of India has encouraged farmers to expand cane cultivation.

Ethanol Blending Program: Successes and Challenges

The NFCSF noted that, under the visionary leadership of Prime Minister Narendra Modi, the Ethanol Blending Program has played a crucial role in reviving the Indian sugar industry and addressing the longstanding issue of surplus sugar stocks. The National Policy on Biofuels, 2018, has been instrumental in setting ambitious targets to divert 60–70 LMT of excess sugar annually towards ethanol production.

Since 2018, India’s ethanol production capacity has grown significantly—from 518 crore litres to 1,800 crore litres in 2025. Over the same period, the ethanol blending rate with petrol has risen sharply from 4.22% to 18.61% as of April 30, 2025. This growth reflects the government’s commitment to promoting clean energy, improving the financial health of sugar mills, and increasing farmers’ incomes.

Addressing Challenges

However, the ethanol sector currently faces several challenges. In the 2022–23 sugar season, the sugar industry diverted 43 LMT of sugar for ethanol production, supplying 369 crore litres of ethanol, which accounted for 73% of the country’s total ethanol blending. In the 2023–24 season, ethanol supply from sugar-based feedstocks fell to 270 crore litres, contributing only 38% to the national blending program. This is projected to decline further to 250 crore litres in 2024–25, making up just 28% of the total blending target of 900 crore litres.

The NFCSF has warned that, without appropriate policy support, this downward trend cannot be reversed. The main reason for the decline is that ethanol procurement prices have not kept pace with the increase in the Fair and Remunerative Price (FRP) of sugarcane, making ethanol production less profitable for sugar mills. Although the industry has the capacity to divert up to 40 LMT of sugar to ethanol this year, only 32 LMT are expected to be diverted. This shortfall is due to the gap between ethanol prices and the better returns from selling sugar directly in the domestic market. As a result, India’s ethanol production capacity of 952 crore litres per year—including 130 crore litres from multi-feed distilleries—remains underutilized.

It is important to note that diverting sugar to ethanol does not reduce overall sugar production. Instead, it helps manage surplus stocks, stabilize market prices, improve the financial viability of sugar mills, and ensure timely payments to farmers.

High-Level Meeting and Policy Recommendations

In light of the growing challenges facing the ethanol sector, a high-level meeting was recently held at the Prime Minister’s Office under the guidance of Tarun Kapoor, Adviser to the Prime Minister. The industry delegation, led by Ravi Gupta, Chairman of IFGE’s Sugar Bioenergy Group and expert Board Member of NFCSF, included Prakash Naiknavare (Ethanol), Subodh Kumar (Biodiesel & Biomass), Ashish Kumar (CBG), and Tushar Patil (SAF). The delegation presented a comprehensive roadmap to strengthen and expand India’s ethanol ecosystem.

During the meeting, the delegation put forward key policy recommendations for government consideration:

1. Revise ethanol procurement prices in line with rising feedstock costs (sugarcane, maize, rice).
2. Extend the EBP blending target beyond 20% with a clear, phased timeline up to 2035.
3. Accelerate the promotion and manufacturing of Flex-Fuel Vehicles (FFVs) to boost demand and ensure market readiness for higher blending rates.

Additionally, the team suggested evaluating the possibility of blending ethanol in diesel as a future strategy to expand ethanol use across all fuel types.