India Plans to Bar Cane Juice From Ethanol Production

The Food Ministry is preparing to bar sugarcane juice and B-heavy molasses from ethanol from November 1, a curb meant to keep more cane in the sugar bowl. Mills would still make fuel from C-heavy molasses, the last liquid left after sugar is taken out. The quieter result is that India’s 20% petrol blend would rest even more on maize and rice, just as sugar stocks opened the season at a decade low.

A formal notice is expected before the ethanol supply year begins. Until it is issued, mills are planning as if juice and B-heavy will be off the list for 2026-27.

Juice and B-Heavy Leave the Ethanol Mix

Each year the ministry sets how much cane juice, syrup and B-heavy molasses can go into ethanol so oil companies can hit the 20% petrol blend. For the supply year that starts on November 1, that tap is likely to close. C-heavy molasses, which holds almost no extra sugar, would remain the only cane route still open.

About 3 million tonnes of sugar, roughly 10% of output, went into ethanol in the supply year that has just ended. Industry officials say shutting juice and B-heavy would drop sugar-based fuel’s share of ethanol from 26% this year to around 10-12 percent next year. That is a share of the ethanol pool, not a share of the sugar crop, and the two figures are easy to mix up.

THE THREE CANE ROUTES TO ETHANOL

• Cane juice or syrup: Whole juice fermented before sugar is made, so almost no crystal sugar is left.
• B-heavy molasses: An earlier molasses cut that still holds sucrose mills could have turned into sugar.
• C-heavy molasses: The final leftover after sugar is taken; this route would still be allowed.

Madhav B. Shriram, vice-president of the Indian Sugar and Bio-Energy Manufacturers Association, told an industry meeting in New Delhi on September 9 that mills can live with C-heavy molasses, which he said contains nil sucrose, and that the shift would put more sugar into the home market. The association has been signalling that stance since late summer, when retail prices at small shops were still near Rs 70 a kg.

Opening Stocks Hit a Decade Low

Mills began the 2026-27 sugar season on October 1 with opening stocks of 3.75 million tonnes, the lowest in more than a decade and down from about 5 million tonnes a year earlier. That pile has to cover October and November, before crushing is in full swing in Uttar Pradesh, Maharashtra and Karnataka.

Output after ethanol use is put at about 28.1 million tonnes in 2025-26, against 35.8 million tonnes in 2021-22. Home use is estimated at 28.7 million tonnes, up from 27.3 million tonnes across the past five seasons. First estimates for 2025-26 overshot the crop by about 11%, after weaker yields and recovery, early flowering in Maharashtra and Karnataka, and red-rot trouble in parts of Uttar Pradesh.

THE SUGAR BALANCE MILLS ARE WALKING INTO

The average retail price was Rs 55.28 a kg on October 5, according to the Department of Consumer Affairs’ price monitoring cell, up 20% from a year earlier and down 10% from a month earlier. An official said it could ease toward Rs 52 a kg once crushing spreads. Deficient monsoon rain in Maharashtra and Karnataka is the reason the next crop is already being treated as a risk, not a cushion.

An August government note said the recent price jump came from a smaller crop, festive demand, weather damage, tight world stocks and hoarding, and that it is wrong to pin the spike on ethanol. The same note put the share of sugar diverted for ethanol at around 9% in 2025-26, down from around 12% in 2022-23.

Grain Already Supplies Nearly Three-Fourths

The cane curb lands on a blend that has already changed shape. A July 2026 attaché report from USDA’s Foreign Agricultural Service in New Delhi found that grain-based sources now supply 73 percent of ethanol, with corn at 46% and damaged grain plus government rice at 27%. That matches the government’s own line that nearly three-fourths of ethanol now comes from grain, especially maize.

India has already hit the 20% petrol blend, years ahead of the old 2030 date. Installed capacity is about 2,000 crore litres, far above what oil companies take for E20. Grain plants have been bidding more litres than the offtake tenders, and many of those units make nothing else, unlike a sugar mill that still sells crystal sugar. Chandra Kumar Jain, president of the Grain Ethanol Manufacturers Association, has said plants running at half of capacity cannot last on that diet.

So the 20% target is not the piece that breaks if juice and B-heavy go. Oil companies can keep blending from maize, rice and leftover molasses. What changes is which farm belt funds the blend, and which mill tank still earns fuel money.

Why C-Heavy Ethanol Pays Mills Less

Juice and B-heavy were never leftover streams. From the 2018-19 supply year, New Delhi paid more for those routes so mills would give up sugar and still cover cane dues. The administered ex-distillery ethanol prices by feedstock for 2025-26 still show that gap: Rs 65.61 a litre from cane juice, syrup or sugar, Rs 60.73 from B-heavy molasses, and Rs 57.97 from C-heavy. Maize ethanol is priced at Rs 71.86 a litre, the top of the list.

Deepak Ballani, director general of ISMA, has been blunt about what that extra litre did for mills. Cane prices are set by the state. Sugar often sells below the cost of turning that cane. Ethanol closed the hole and, he said, cut farmer arrears over the past eight to 10 years. The sugar industry has put about Rs 40,000-45,000 crore into roughly 900 crore litres of mill-tied capacity. About 5.5 crore farmers and their families grow cane.

If ethanol were removed from the system, the industry would likely become financially unviable again, leading to payment delays and renewed rural distress.

Deepak Ballani, Director General, Indian Sugar and Bio-Energy Manufacturers Association

The planned curb does not remove ethanol. It knocks out the two best-paid cane routes and leaves the cheapest one. As of August 20, the government said 97% of 2025-26 cane dues had been paid. That record was built while juice and B-heavy were still legal. The next crushing season will test whether C-heavy plus grain offtake still clears the FRP and state advisory bills on time.

The Squeeze Moves to Maize

Once juice and B-heavy are barred, the litres that used to come from cane have to come from grain if the 20% blend is to hold. Maize is already the largest single feedstock, and it is also the energy base of poultry feed. Wholesale maize was around Rs 27 a kg in September. Poultry feed has moved from about Rs 25 a kg in April to more than Rs 30 a kg by mid-September.

That is the second bill from the same policy. Sugar stays in the bowl. The blend stays at 20%. The pressure slides into corn country and into the price of eggs and chicken. Livestock feed mills have already asked the government to ring-fence maize for animals if cane ethanol is cut further. Distillers want the opposite: more offtake, and no freeze that leaves new plants idle.

The argument on X around the notice has been less about mill tank maps than about that slide. An agri trader’s reading of the same figures is the one that holds up: ethanol is already about three-fourths grain, so a cane-juice bar does not empty the petrol tank. It tightens maize. Motorists campaigning against E20 on October 6 are still fighting the blend itself, even as the sugar side of that blend is being taken out.

New Delhi Has Run This Restriction Before

This is not a new switch. It is the drought playbook used when the cane crop failed before, then reversed when tanks filled again.

HOW THE CANE-TO-FUEL TAP HAS BEEN TURNED

1. 2018-19: Mills are allowed to make ethanol from B-heavy molasses and from cane juice or syrup, with higher state prices to cover the sugar they give up.
2. December 2023: After a weak monsoon crop, juice and B-heavy are restricted so more cane becomes sugar. C-heavy stays open.
3. August 29, 2024: The restriction is lifted for the new supply year so mills can use juice, syrup and B-heavy again, including leftover B-heavy stocks.
4. May 2026: Overseas sugar sales are banned through September 30 after the crop undershoots early estimates.
5. August 2026: Duty-free import of 1 million tonnes of raw sugar is allowed, the first such window in about a decade, with stock limits on bulk users.
6. November 1, 2026: Juice, syrup and B-heavy are expected to be barred again for the new ethanol supply year.

Crisil’s tally shows sugar sent to ethanol rose from 0.8 million tonnes in 2019-20 to about 3 million tonnes in 2025-26, a nearly four-fold jump. Higher fair and remunerative prices and state advisory prices pushed cane costs up in the same years. The programme was built to soak up surplus and pay farmers. In a short crop, the same pipes compete with the sugar bag.

The Export Ban Expired on September 30

The May export ban lapsed on September 30. Industry officials expect it to return, and Ballani said in late September that India may need imports rather than exports if Maharashtra and Karnataka stay dry. ISMA was still doing field checks and wanted a clearer crop read by the second or third week of October. States and mills have been told to start crushing from October 15, which the government said could lift October output from the usual 3-4 lakh tonnes to more than 10 lakh tonnes.

WHAT WE KNOW

• The likely rule: Juice, syrup and B-heavy off limits for ESY 2026-27; C-heavy still allowed.
• The stock: 3.75 million tonnes on October 1, lowest in more than a decade.
• The blend: 20% in petrol already reached; grain already the bulk of ethanol.

WHAT IS UNCONFIRMED

• The notice: No Food Ministry gazette has been issued; timing is “soon,” before November 1.
• The next crop: Maharashtra and Karnataka rain damage is real; the tonnage is not yet a firm estimate.
• Exports and imports: The May ban has lapsed; a fresh export freeze and more raw-sugar imports are discussed, not notified.

Crushing in the next fortnight will show whether Rs 52 sugar is a real landing or a hope. The ethanol notice, when it comes, will show how much of the blend New Delhi is willing to rest on maize after it has already taken the juice out of the mill.