Sugar Stocks Surge Up To 15% In Market Rally, Government Removes All Limits On Ethanol Production

Mumbai: On September 1, 2025, the Indian government announced a major change: sugar mills and distilleries can now produce as much ethanol as they want from sugarcane juice, sugar syrup, and molasses. This rule will start from the new ethanol supply year beginning on November 1, 2025.

Earlier, during the 2023-24 ethanol supply year, there were restrictions because sugarcane output was low. But with good monsoon rains this year, sugarcane production is expected to rise. So, the government has removed all limits to support the industry and help reach India’s fuel blending goals.

Sugar Stocks Rally Strong

Following the announcement, stocks of major sugar companies like Balrampur Chini, Avadh Sugar, Shree Renuka Sugars, Bajaj Hindusthan Sugar, and Dalmia Bharat Sugar jumped up to 15 percent during Tuesday's stock market session. Investors see this as a big positive step for the sector.

Why This Matters

India is the world’s second-largest sugar producer. But the industry has faced tough times due to falling sugarcane supply. With this new policy, sugar mills can now turn more of their cane juice and B-heavy molasses into ethanol. Ethanol sells at better prices than sugar, which can boost company earnings.

Also, the move helps India progress toward its goal of 20 percent ethanol blending in petrol by 2025, and even possibly 30 percent in the future.

As per the experts this is a big relief for sugar companies. The removal of production caps means mills can now use their full capacity to produce ethanol. This will improve their profits and help the sector grow.

Government Will Monitor Sugar Availability

While mills are now free to make more ethanol, the government will regularly check sugar availability in the market. This is to make sure there’s enough sugar left for domestic consumption.