Sugar stocks rose in morning trade on September 2 after the government lifted limits on ethanol production from sugarcane juice, sugar syrup, and molasses for the supply year 2025-26.
The Ministry of Consumer Affairs, Food, and Public Distribution declared that effective November 1, sugar mills and distilleries will be able to create ethanol without any quantitative restrictions. The move is a departure from the current marketing year, when ethanol output from cane-based feedstocks was reduced due to limited sugarcane supply.
The Department of Food and Public Distribution (DFPD) stated that it will periodically assess the diversion of sugar to ethanol to ensure appropriate domestic sugar availability throughout the year. This shift comes as sugarcane supplies are likely to increase in the coming season, thanks to two consecutive years of good monsoon rains that allowed farmers to boost cane cultivation.
Market Reaction
On the BSE, Rajshree Sugars & Chemicals shares led the rise, rising 20% to Rs 45.36, followed by Shree Renuka Sugars shares, which jumped 14% to Rs 32.80.
Sugar stocks rallied in response to the policy adjustment. Balrampur Chini Mills surged more than 7% to Rs 580, while Shree Renuka Sugars jumped more than 12% to Rs 32.28. Bajaj Hindusthan Sugar and Godavari Biorefineries grew by up to 8%. Uttam Sugar Mills increased by more than 12%, while Dhampur Sugar Mills and Magadh Sugar & Energy increased by over 10%. Triveni Engineering increased by 4.5%, and Dwarikesh Sugar, along with other counters, increased by nearly 4%.
Legal Context: The Supreme Court Rules on Ethanol-Blended Petrol
The event also came after the Supreme Court dismissed a petition challenging the nationwide implementation of 20% ethanol-blended gasoline (EBP-20). The petitioner claimed that vehicles made before April 2023, including certain BS-VI compliant models less than two years old, are not fully compatible with fuel containing 20% ethanol.
The petition, filed by counsel Akshay Malhotra, asked the Ministry of Petroleum and Natural Gas to ensure that ethanol-free petrol is available at all stations. However, a court chaired by Chief Justice of India BR Gavai, along with Justice K Vinod Chandran, dismissed the petition.
Attorney General R Venkataramani, who opposed the petition, stated that the subject had already been thoroughly investigated prior to the release. He said that the petition was a “front” for a wider lobby, pointing out that the ethanol strategy benefits sugarcane growers and saves foreign exchange. “Should people outside the country decide what fuel India should use?” he observed.
