Centre Rejects Ethanol Policy Link to Rising Sugar Prices, Cites Lower Output

The Centre has rejected claims that the recent rise in sugar prices is a result of increased diversion of sugarcane towards ethanol production, saying that the primary reason for the price surge is lower domestic sugar output.

The clarification comes amid a growing debate over the government’s ethanol-blending programme and its possible impact on sugar availability. Critics have argued that diverting sugarcane and related feedstock for ethanol production leaves less raw material for sugar mills, potentially reducing sugar supplies and pushing up prices.

The government, however, has disputed this argument and maintained that the recent increase in sugar prices is mainly connected to a decline in production. Officials have said that lower output has affected market availability and contributed to the upward movement in prices. The issue has gained additional political attention as the government continues to promote ethanol blending in petrol. India has been expanding its ethanol programme as part of efforts to reduce dependence on imported crude oil, support farmers and create an additional market for agricultural produce.

Opposition to the policy has intensified in recent weeks, with critics questioning whether the expansion of ethanol production could have unintended consequences for food commodities such as sugar. Some political leaders have linked the increase in sugar prices to the diversion of sugarcane for fuel production and have criticised the government’s broader E20 petrol policy.

The Centre has rejected these allegations and sought to separate the sugar-price increase from the ethanol programme. According to the government’s assessment, production levels rather than ethanol diversion are responsible for the present pressure on the sugar market. Authorities are nevertheless keeping a close watch on sugar availability and prices. The government is expected to assess market conditions and take appropriate measures to ensure that adequate supplies remain available, particularly with demand likely to increase during the festive season.

Sugar prices are closely monitored because the commodity is an important part of household consumption and is widely used by the food and beverage industry. A sustained increase can affect consumers as well as businesses that depend on sugar as a key raw material.

Ethanol blending has emerged as a major component of the country’s strategy to reduce oil imports and expand the use of domestically produced fuel. While critics continue to question the impact of the policy on sugar availability, the Centre has maintained that there is no direct basis for attributing the latest price increase to ethanol production.