India May Hike Sugar And Ethanol Prices To Support Mills Amid Surplus Production

India is weighing a proposal to increase the minimum selling price of sugar and ethanol to aid sugar mills grappling with surplus production and rising operational costs. The move comes after industry associations, including the Indian Sugar and Bio-Energy Manufacturers Association (ISMA) and the National Federation of Cooperative Sugar Factories (NFCSF), submitted formal requests to the government.

The current MSP of sugar has remained unchanged at ₹31 per kg since February 2019. ISMA has proposed a hike to ₹40 per kg, while NFCSF suggests aligning it with the prevailing ex-mill realization rate. The government is also reviewing ethanol pricing to support its 20% blending target in petrol by 2025–26.

Key developments include:  

• The Centre recently approved the export of 1.5 million tonnes of sugar for the 2025–26 season.
• India’s sugar production rose 48% year-on-year to 1.05 million tonnes as of mid-November, with 325 mills operational.
• Improved cane recovery and expanded crushing operations have led to surplus output, prompting calls for price support.
• Ethanol pricing revisions are expected to encourage higher procurement and blending volumes by oil marketing companies.
• The government is likely to announce its decision in the coming weeks after assessing domestic price impacts.

Sources: The Hindu Business Line, CNBC TV18, Tribune India.