Ethanol vs Sugar Production in India: Challenges & Opportunities

In an Ethanol & Bioenergy India Conference (SEIC) 2025, Vijendra Singh, Executive Director & Dy CEO, Shree Renuka Sugars Limited, shared his views on the changing dynamics of ethanol and sugar manufacturing in India. He spoke about how decision-making in the sector has always been simple because the market was controlled, with the prices of sugar and ethanol remaining uniform. Also, he mentioned the need for secure pricing policies and improved distribution mechanisms to ensure smooth ethanol supply. He emphasized that ethanol support is crucial for India’s energy security, farmer welfare, and industry benefits.

Decision-making in India between sugar and ethanol is simple, as the market is controlled. The price of ethanol is predictable, but this year, it was an exception. The cane price and the sugar price can be predicted simply. As a result, all calculations are well-defined, and deciding on producing ethanol and sugar is simple. Ethanol offers the advantage of quick liquidity. The advantage of ethanol production is that it can be supplied as it is produced, with the oil companies ready to purchase it. However, sugar is sold under the quota system, which remains in the factory for 12 to 14 months. During this period, interest must be paid on the cost of the stored stock. These are all important factors when deciding between ethanol and sugar production.

However, the scenario in Brazil is different. When compared to Brazil it is different because the sugar and ethanol both are open there. There are no restrictions on the factory for how to sell, and where to sell. However, in India, ethanol can be sold to oil companies only through a tender system. At the beginning of the year, tenders are issued. But unlike last year, the price is not pre-defined and the ethanol is supplied as it is produced and the process goes well. However, the issue that remains is logistics in ethanol.

Challenges in Ethanol Logistics and Pricing

As ethanol blending and supply are increasing, oil companies are not able to cope with the supply which leads to the long queues of trucks and logistic issues. It is important to address this issue at the industry level. The industry should be allowed to dispense the ethanol. It is quite inefficient to transport ethanol to a depot, only to bring petrol back to the same location. This not only wastes energy but also contributes to unnecessary pollution. All ethanol programs are slowed down because of policies and all business goes with the viabilities. The cost of raw materials continues to rise, ethanol prices are not increasing at the same rate which is a critical situation, and a lot of policy mismatches are there such as if the ethanol price goes up, more sugar goes to ethanol and the sugar price will automatically go up. This is like solving a puzzle in two ways. But it is important to find out the better way and permanent way to do it.

The disruptions in ethanol production last year, along with the anticipation of lower sugar production, and increased sugar prices over the past two years, have shaken the confidence of the industry. This is a serious issue that the government should address. Transitioning to ethanol is a highly beneficial move for the country. It will help the industry, the nation, and the farmers. 90% of the revenue generated from production goes directly to farmers, not to the producers. 

Over the last two years, the Fair and Remunerative Price (FRP) has increased by 11%. Based on this standard, the price of juice ethanol should have risen by at least 10%. However, there has been no such increase. Similarly, the price adjustments for B-heavy ethanol have also been inadequate. As for C-heavy ethanol, its impact on the ethanol market is minimal, as very little of it is being produced. Overall, the situation remains concerning, but there is hope for a positive outcome in the future.