India's Sugar Sector Set for Major Regulatory Overhaul to Enhance Ethanol Production
Centre weighs overhaul of sugar sector's rules to boost ethanol production, protect states
Hindustan TimesImage: Hindustan Times
The Indian government is finalizing a comprehensive overhaul of sugar sector regulations, focusing on ethanol production and empowering states. Proposed changes include increasing the distance between sugar mills to 25 km and integrating ethanol production into the sugar industry framework, aiming to boost efficiency and farmer earnings.
- 01The proposed Sugarcane (Control) Order, 2026 aims to increase the distance between sugar mills from 15 km to 25 km.
- 02Ethanol production will now be regulated as part of the sugar industry, reflecting India's commitment to its E20 blending program.
- 03States will gain more authority in approving capacity additions for sugar mills, reducing federal oversight.
- 04The guaranteed price for sugarcane remains unchanged at ₹355 per quintal, ensuring profitability for farmers.
- 05These reforms mark the most significant changes to the sugar sector since 2012.
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The Indian Union government is preparing to implement significant reforms in the sugar sector through the draft Sugarcane (Control) Order, 2026. This overhaul aims to enhance ethanol production and empower states by increasing the mandatory distance between sugar mills from 15 km to 25 km. This distance regulation seeks to prevent competition among mills for farmers' sugarcane. Currently, states like Maharashtra, Punjab, and Haryana follow the 25-km rule, while major producers like Uttar Pradesh and Karnataka do not. The new framework will also integrate ethanol production from molasses into the sugar sector, aligning with India's E20 blending program, which mandates mixing ethanol with petrol. The capacity for ethanol production is currently around 20 billion liters annually. Industry representatives have welcomed these changes, noting their potential to improve operations and farmer earnings. Notably, the guaranteed fair and remunerative price for sugarcane will remain at ₹355 per quintal (approximately $4.30 USD), ensuring stable earnings for nearly 50 million cane growers. The reforms are seen as the most substantial since the 2012 changes that eliminated the levy sugar system, reflecting a significant shift in policy towards a more competitive and efficient sugar industry.
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These reforms are expected to stabilize sugarcane prices and enhance the profitability of sugarcane farming, benefiting millions of farmers across India.
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