India considers curbing use of sugarcane for ethanol to tame record-high sugar market
Economic Times 2 hrs ago·10 Aug 2026, 10:52 am
India is exploring a shift in its ethanol policy to address a booming sugar market. The government is considering limiting the amount of sugarcane used for ethanol production. This move aims to boost domestic sugar output and stabilize prices, which have reached record highs. The decision comes as reduced rainfall in key growing regions has raised concerns about next year's harvest.
For investors, this policy shift could impact the broader market by altering supply dynamics. A reduction in ethanol production from sugarcane would free up more sugar for the domestic market, potentially easing price pressures. However, the government might compensate by increasing the use of other grains like corn and rice for ethanol to maintain its blending targets. This could have ripple effects on agricultural commodity markets.
Investors should watch for official government announcements regarding these potential restrictions. The outcome will depend on the balance between stabilizing sugar prices and maintaining the national biofuel blending program. Market participants will also monitor weather patterns in key agricultural states, as they remain a critical factor in future supply forecasts.
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