Pilibhit: The Indian sugar industry has voiced frustration over the Centre's failure to revise ethanol prices in line with the cabinet-approved formula that links rates to the annually updated Fair and Remunerative Price (FRP) of sugarcane.
Since 2014-15, ethanol prices for sugarcane juice and B-heavy molasses had been aligned with FRP—a mechanism reaffirmed by the cabinet for the 2022-23 ethanol supply year. Under the model, Oil Marketing Companies (OMCs) were expected to reflect ethanol price changes in retail fuel prices to ensure transparency.
However, industry bodies say this formula has been ignored in 2023-24 and 2024-25. Despite an 11.5% hike in FRP—from Rs 305 to Rs 340 per quintal—ethanol prices remained unchanged. With FRP expected to rise to Rs 355 in 2025-26, producers are left uncertain about future pricing.
"This disconnect is discouraging for ethanol producers," said Deepak Ballani, Director General of the Indian Sugar and Bio-Energy Manufacturers Association (ISMA). "Despite the govt's target of 30% ethanol blending by 2030, stagnant prices are eroding industry confidence."
Prices of ethanol derived from sugarcane juice have remained fixed at Rs 65.6 per litre, and B-heavy molasses-based ethanol at Rs 60.7, since 2023-24. Meanwhile, ethanol from maize is priced significantly higher at Rs 71.8 per litre—despite comparable quality—further frustrating sugar producers.
The gap has contributed to a sharp fall in sugar diversion for ethanol production, dropping from 38 lakh tons in 2022-23 to 21.5 lakh tons in 2023-24.
"The sugar industry has invested nearly Rs 40,000 crore to double its distillation capacity to 850 crore litres annually," Ballani said. "But without price revisions, this growth is unsustainable."
He added that restoring a structured pricing mechanism would not only stabilise the sector but also strengthen India's renewable energy efforts and help cut fuel imports.
