The NFCSF points to stagnant ethanol prices, despite the increase in the sugarcane Fair and Remunerative Price, as the reason for the decline, making ethanol production less profitable

The sugar industry has called for a revision in ethanol procurement prices and an extension of blending targets beyond the current 20 per cent, as its contribution to the national ethanol programme has sharply declined from 73 per cent to just 28 per cent. The National Federation of Cooperative Sugar Factories (NFCSF) also urged faster promotion and production of Flex-Fuel Vehicles (FFVs) to boost ethanol demand and prepare the market for higher blending levels.

These demands were presented by an industry delegation led by Ravi Gupta, Chairman of the Indian Federation of Green Energy’s (IFGE) Sugar Bioenergy Group and NFCSF board member, during a recent meeting at the Prime Minister’s Office.

In the 2022-23 season, the sugar industry achieved a milestone by diverting 4.3 million tonnes of sugar to ethanol production, supplying 369 crore litres, which made up 73 per cent of the country’s ethanol blending. However, in 2023-24, this dropped to 270 crore litres, or 38 per cent of the blending programme, and is projected to further decline to 250 crore litres (28 per cent) in 2024-25, out of a 900 crore litre target.

The primary cause of this reduction is that ethanol prices have not kept pace with the increased Fair and Remunerative Price (FRP) of sugarcane, reducing profitability for mills producing ethanol. Although there is capacity to divert 4 million tonnes of sugar into ethanol this year, only about 3.2 million tonnes are expected to be diverted due to better returns from selling sugar in the domestic market.

Consequently, India’s ethanol production capacity of 952 crore litres annually, including 130 crore litres from multi-feed distilleries, is underutilized.

The Ethanol Blending Programme (EBP), part of the National Policy on Biofuels 2018, aims to convert 6 to 7 million tonnes of surplus sugar into ethanol each year. Since the policy’s launch, India’s ethanol production capacity has grown from 518 crore litres in 2018 to an expected 1,800 crore litres in 2025, and the blending rate has increased from 4.22 per cent to 18.61 per cent as of April 30, 2025.

Sugar production for the current 2024-25 season reached 28.69 million tonnes by April 30, with 3 million tonnes diverted to ethanol. The industry has also suggested exploring ethanol blending with diesel to further expand ethanol use.

NFCSF emphasized that diverting sugar to ethanol doesn’t reduce sugar production but helps manage surplus stocks, stabilizes market prices, improves mill finances, and ensures timely payments to farmers.