India is set to extend its ban on sugar exports for a second consecutive year as it faces the likelihood of reduced cane output, according to government sources. This decision comes as New Delhi aims to bolster local sugar supplies and increase ethanol production.
The Indian government plans to raise the price at which oil companies purchase ethanol from sugar mills, a move intended to enhance the availability of this biofuel. The absence of Indian sugar from the global market is expected to tighten supplies further, which could lead to higher benchmark prices in New York and London.
The anticipated ban on sugar exports coincides with a decline in sugar production from Brazil, the world’s leading producer, due to drought conditions. A government source stated, “In the current crop scenario, there is no space for sugar exports,” emphasizing that local demand must be prioritized before considering exports.
India aims to increase the share of ethanol in gasoline to 20% by 2025-26, up from the current 13%-14%. To achieve this, more cane is needed to meet the ethanol blending targets. Indian sugar mills, including E.I.D.-Parry, Balrampur Chini Mills, and Shree Renuka, have been ramping up their ethanol production capacity in recent years.
Additionally, the government is reportedly considering a more than 5% increase in the ethanol procurement price for the upcoming marketing season starting in November. A recent order also allows sugar mills to utilize cane juice or syrup for ethanol production beginning in November.
These plans to extend the sugar export ban and adjust ethanol prices are expected to be formally announced later this month.