News Capsule: ISMA urges higher ethanol allocation from sugar-based feedstocks
29-Oct-2025 02:53 PM
News Capsule: ISMA urges higher ethanol allocation from sugar-based feedstocks
★ The Indian Sugar & Bio-Energy Manufacturers Association (ISMA) today raised serious concerns over the declining share of sugar-based feedstocks in ethanol production and the government’s decision to keep the Minimum Selling Price (MSP) of sugar unchanged for six years, warning that these factors could destabilize the sugar industry. The press conference was also attended by iGrain India.
★ ISMA stated that under the Ethanol Supply Year (ESY) 2025–26, only 289 crore litres of ethanol have been allocated from sugar-based feedstocks — just 28% of the total requirement, while 72% (760 crore litres) has been allocated from grain-based sources.
★ This decision comes despite the sugar industry having invested over ₹40,000 crore to build an ethanol production capacity of 900 crore litres. ISMA warned that as a result, distilleries may operate at less than 50% capacity, sugar diversion to ethanol could fall by about 34 lakh tonnes, leading to excess sugar stocks in the domestic market and a further drop in prices.
★ Due to the expected cash flow crunch, sugar mills could face difficulties in paying farmers on time, potentially increasing cane arrears.
★ The Fair and Remunerative Price (FRP) of sugarcane has risen 16.5% since 2022–23, from ₹305 to ₹355 per quintal, while ethanol procurement prices have remained unchanged. The current rates — ₹60.73 per litre (from B-heavy molasses) and ₹65.61 per litre (from cane juice) — are about ₹5 per litre below production costs, making ethanol production from sugarcane economically unviable.
★ The MSP for sugar has been fixed at ₹31 per kg since February 2019, even though the cost of production has now reached ₹40.24 per kg. With sugar prices expected to decline further by December 2025, mill profitability and liquidity are likely to worsen, leading to delayed payments to farmers.
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ISMA has urged the government to take immediate steps, including:
• Increasing the share of sugar-based feedstocks in ethanol allocation to at least 50%.
• Revising ethanol procurement prices to reflect actual production costs.
• Raising the MSP of sugar in line with increased FRP and cost of production.
• Expanding ethanol blending beyond E20 to E100, supported by Flex-Fuel Vehicles (FFVs).
• Announcing the 2025–26 sugar export policy soon to manage surplus stocks and improve liquidity.