Major boost for sugar industry and ethanol producers as Centre balances domestic supply and global demand
New Delhi ( Economy India): In a significant policy decision aimed at supporting India’s sugar industry and ensuring stability in the domestic market, the Central Government has allowed the export of 1.5 million tonnes of sugar for the 2025–26 sugar season, which began in October 2025.
Union Food Minister Pralhad Joshi announced that the Centre has also decided to remove the 50% export duty on molasses, a key by-product used in ethanol production. The move is expected to provide liquidity to sugar mills and boost India’s ethanol blending programme.
Official Communication to Karnataka CM
Minister Pralhad Joshi conveyed the decision in a letter dated November 7 to Karnataka Chief Minister Siddaramaiah, informing him that the Ministry of Food has approved the export quota and lifted the duty on molasses.
Karnataka, along with Uttar Pradesh and Maharashtra, is among India’s top sugar-producing states. The decision comes as a relief to sugar mills in these regions, which were facing financial strain due to surplus stock and limited export opportunities in the past two years.
Relief for the Sugar Industry
Industry experts and the Indian Sugar Mills Association (ISMA) have welcomed the government’s announcement, calling it a timely intervention. The sugar sector has been under pressure due to lower global prices and export restrictions imposed in previous seasons.
The export approval will improve cash flow for sugar mills, allowing them to make timely payments to sugarcane farmers — a recurring concern in India’s sugar economy.
Balancing Domestic Supply and Global Demand
The government’s calibrated approach aims to maintain a balance between domestic availability and global competitiveness.
India is the world’s second-largest producer of sugar after Brazil, and fluctuations in global output — particularly in Brazil and Thailand due to weather conditions — have impacted international sugar prices.
Allowing 1.5 million tonnes of exports is seen as a strategic move that will stabilize both domestic prices and international supply chains.
Boost for Ethanol Production
The decision to remove the export duty on molasses is expected to provide a strong push to the government’s Ethanol Blending Programme (EBP).
Molasses is a key raw material for ethanol production, and with this move, domestic ethanol producers are likely to become more competitive.
India has set an ambitious target to achieve 20% ethanol blending in petrol by 2025, a milestone that supports the twin goals of reducing carbon emissions and import dependence on crude oil.
Positive Impact on Rural Economy
Analysts say the new export policy will have a direct positive impact on the rural economy.
With improved liquidity, sugar mills will be able to clear dues to sugarcane farmers more efficiently. This will not only stabilize rural incomes but also create additional employment opportunities in the sugar and ethanol value chain.
A Calibrated Export Policy
In recent years, the government has maintained a measured approach to sugar exports — limiting shipments when necessary to ensure domestic stability.
During the 2022–23 and 2023–24 seasons, exports were restricted to prevent a domestic shortage amid rising ethanol diversion.
Now that production levels have normalized, the new export quota reflects a balanced and forward-looking trade policy.
Industry Reaction
The ISMA praised the government’s step, calling it a “win-win policy” for all stakeholders.
“This timely decision will strengthen the financial position of sugar mills while protecting the interests of farmers and ensuring price stability,” the association said in a statement.
Experts also note that lifting the duty on molasses will encourage more investment in ethanol plants and boost India’s green energy initiatives.
Aligned with India’s Clean Energy Goals
The government’s dual focus on supporting sugar exports and promoting ethanol production aligns with India’s long-term sustainable energy transition strategy.
Ethanol blending directly contributes to India’s Net Zero 2070 target by reducing fossil fuel consumption and lowering greenhouse gas emissions.
(Economy India)
