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Subject: Biofertilizers/Fuels

  • Atmanirbharta in fuel must strengthen, not undermine, India’s food security

    Atmanirbharta in fuel must strengthen, not undermine, India’s food security

    Why in the News

    The all India modal retail price of sugar has climbed from around Rs 45 a kg to about Rs 65 a kg within a month, an increase of nearly 44 per cent. The Union government has attributed the rise to hoarding by traders and millers and has threatened strict action. The rise follows a tightening of supply on three counts at once, arriving just before the festive season when sugar demand typically rises. The tension is that the same government fixes cane prices, sugar sales, imports, exports and the allocation of feedstock to ethanol, so a price spike inside a fully administered chain is a policy outcome rather than a market one.

    What is the Ethanol Blended Petrol Programme?

    1. What it requires: Oil marketing companies blend a mandated share of ethanol into the petrol they sell, which substitutes domestically produced fuel for imported crude.
    2. What it runs on: Ethanol is produced from sugarcane juice, syrup and molasses, and from surplus foodgrain such as rice and maize.
    3. How fast it scaled: Blending stood at 1.53 per cent in 2013-14, reached around 5 per cent by 2019-20 and 20 per cent in 2025-26, and feedstock supply did not keep pace with that trajectory.

    Why did sugar prices spike?

    1. The opening cushion had halved: Stocks at the start of the current sugar year, which runs October to September, were 5 million tonnes against 8 million tonnes a year earlier, leaving little room to absorb a fresh shock.
    2. Production came in below estimate: The 2025-26 output estimate was cut from about 34.3 million tonnes to 30.6 million tonnes on damage from red rot, a fungal disease that rots the cane stalk and destroys sucrose, and from top borer. About 27.35 million tonnes had been produced by June, so 3.25 million tonnes would have to arrive between July and September against a six season average of only 0.38 million tonnes for those months, pointing to a further cut to between 28 and 29 million tonnes.
    3. Ethanol removed supply at the worst moment: The ethanol programme diverted about 2.75 million tonnes of sugar at a time when supplies were already tight. That diversion is what turns energy policy into a competitor of the food market.

    Why can the market not correct the shortage on its own?

    1. Price signals are not allowed to act: In a more open economy a production shortfall corrects itself as higher prices pull in imports and trim consumption.
    2. Every step is administered: Sugarcane pricing, sugar sales, imports, exports and ethanol feedstock allocation are all decided by the government, so a correction has to be ordered rather than triggered.
    3. The calendar closes the escape route: Fresh cane will not reach mills in significant quantity until mid October, so the market must run on existing stocks through the festive demand peak.

    What correction does the assessment call for?

    1. Imports opened too narrowly: One million tonnes of duty free raw sugar has been allowed, against an assessed requirement of at least 3 to 4 million tonnes of refined sugar reaching the open market before and during the festive season. The 100 per cent import duty on refined sugar should be cut to zero or to 5 per cent.
    2. Shift the ethanol feedstock temporarily: Sugar based ethanol should be reduced sharply, with rice from Food Corporation of India (FCI) stocks held far above buffer norms taking its place. FCI should charge ethanol plants at least the procurement price of rice, if not its full economic cost.
    3. Import ethanol or lower the mandate: Ethanol can be imported directly when domestic feedstock is pushing up food prices, or the blending share can be brought down from 20 per cent to about 15 per cent.

    Does switching feedstock end the food versus fuel trade off?

    1. Maize is the least thirsty option: Maize does not consume as much water as rice or sugarcane, and it is already being used as a primary ethanol feedstock.
    2. Yield is the binding constraint: Maize productivity in India hovers around 3.5 tonnes per hectare against about 11 tonnes per hectare in the United States, so the surplus that fuel demand needs does not exist.
    3. The pressure moves to protein: Diverting more maize without a matching rise in output raises maize prices, and that passes into poultry meat, eggs and milk, where maize is the main feed.
    4. The trade off relocates rather than ends: Moving from sugar to rice or maize shifts the food versus fuel choice to a different crop, and closing it requires a large maize surplus, which raises the question of whether India will permit the genetically modified maize that drives United States yields.

    How should the ethanol programme be recalibrated?

    1. The basic number is missing: The net energy balance of each feedstock, meaning the energy returned against the energy spent producing it, has not been established, so allocation is being decided without it.
    2. Let the buyer choose the feedstock: Oil marketing companies could be given flexibility to source ethanol from the most economical feedstock, subject to safeguards for food security, farmers and the environment, in place of a rigid allocation from sugar, rice and maize.
    3. The state’s role narrows to the buffer: Government should hold strategic buffers and enforce food security safeguards rather than manage every feedstock allocation, and the programme itself needs a full evaluation of its design.

    Challenges to the Ethanol Blended Petrol Programme

    1. Capacity was financed against a fixed mandate: Distillery capacity was built on the assurance of a fixed blending share and long term offtake, so any temporary cut leaves loans outstanding against idle plants. Eg. The Ethanol Interest Subvention Scheme financed new and expanded distilleries through soft loans carrying a 6 per cent interest subvention. Fix. Convert the fixed target into a band with a stated floor, so capacity is financed against the floor rather than against a single number.
    2. The efficiency cost sits with the vehicle owner: Ethanol carries lower energy density than petrol, so mileage falls in engines not calibrated for the blend. Eg. Vehicles built before E20 compatibility became standard draw the same blend at the pump with no compensating price difference. Fix. Retain a lower blend grade at outlets serving older fleets, and publish blend specific mileage data at the pump.
    3. Two administered prices move at different speeds: The government fixes both the cane price and the ethanol procurement price, and only the cane price has been revised upward in successive seasons. Eg. Mills carrying distillation capacity report underutilisation as the margin on ethanol narrows. Fix. Index the ethanol procurement price to the cane price fixed under the same control order.
    4. The gains cluster geographically: Distillery capacity follows cane and grain surpluses, so the income the programme creates concentrates in a few States. Eg. Uttar Pradesh and Maharashtra, the two largest cane producing States, hold the bulk of cane based distillation capacity. Fix. Weight new capacity approvals toward maize growing districts, where the water saving is also largest.

    Conclusion

    Fuel self reliance and food security are traded against each other because the blending target was fixed as a number and the feedstock left to catch up. What to watch is whether the correction stops at emergency imports or reaches the design: a blending band replacing a fixed share, and feedstock chosen by the buyer against a stated food security safeguard. The maize yield gap decides whether the trade off can be closed at all rather than merely moved.

    The Sugar Industry in India

    1. Scale and geography: India is the second largest sugarcane producer, with output of 454.61 million tonnes in 2024-25, drawn mainly from Uttar Pradesh and Maharashtra.
    2. The dependent population: About five crore cane farmers and their families depend on the crop, alongside mill and ancillary unit workers.
    3. Mills are multi product units: Beyond sugar, a mill earns from ethanol, bagasse co-generated power, and press mud biogas and bio-fertiliser.

    Laws and Rules Governing the Sugar and Ethanol Sector

    1. Essential Commodities Act, 1955: Sugar is a scheduled commodity under it, so the Centre can impose stock limits and regulate sale and distribution.
    2. Sugarcane (Control) Order, 1966: Issued under that Act, it is how the Centre fixes the Fair and Remunerative Price payable by mills to cane growers.
    3. National Policy on Biofuels, 2018: Sets ethanol blending targets and permits cane juice, syrup, molasses and surplus foodgrain as feedstock, its 2022 amendment advancing the 20 per cent target.
    4. Foreign Trade (Development and Regulation) Act, 1992: Sugar exports are regulated through notifications issued under it, which placed raw, white and refined sugar in the prohibited category.

    Government Initiatives for the Sugar Sector

    1. Sugar Development Fund: Provides concessional loans for mill modernisation, crushing capacity expansion, co-generation and cane development.
    2. Pradhan Mantri JI-VAN Yojana: Supports second generation ethanol from crop residue rather than food grade feedstock.

    Challenges in the Sugar Sector

    1. Cane price and sugar price move independently: The Fair and Remunerative Price rose from Rs 285 a quintal in 2020-21 to Rs 340 in 2024-25 and Rs 355 for 2025-26, and the minimum selling price of sugar has stayed at Rs 31 a kg since 2019. Eg. Cane arrears recur in Uttar Pradesh whenever mill realisation lags the obligatory cane price. Fix. Adopt the Rangarajan Committee’s revenue sharing formula, linking cane payment to realisation from sugar and by-products.
    2. Export policy doubles as an inflation tool: Raw, white and refined sugar sit in the prohibited export category to protect domestic stocks and ethanol feedstock, costing mills global market access. Eg. Exporters lose long term contracts each time the category is switched mid season. Fix. Announce an export quota at the start of each sugar season against a stated closing stock norm, letting mills contract ahead.
    3. The highest recovery belt is the most water stressed: Maharashtra, Karnataka and Tamil Nadu record higher sucrose recovery and face the sharpest groundwater depletion. Eg. El Nino years have cut cane availability in Maharashtra and Karnataka and closed crushing seasons early. Fix. Make drip irrigation and fertigation under the Pradhan Mantri Krishi Sinchayee Yojana a condition for cane area expansion, with early maturing drought resistant varieties.
    4. The northern belt crushes longer and recovers less: Uttar Pradesh and Bihar run longer crushing seasons on lower sucrose recovery, with fragmented landholdings raising cane aggregation costs. Eg. A single national recovery benchmark treats a Bihar mill and a Kolhapur mill as comparable. Fix. Set belt specific recovery, crushing and payment benchmarks rather than one national norm.

    “[2025] Consider the following statements:

    Statement I: Of the two major ethanol producers in the world, i.e., Brazil and the United States of America, the former produces more ethanol than the latter.

    Statement II: Unlike in the United States of America, where corn is the principal feedstock for ethanol production, sugarcane is the principal feedstock for ethanol production in Brazil.

    Which one of the following is correct in respect of the above statements?

    (a) Both Statement I and Statement II are correct and Statement II explains Statement I

    (b) Both Statement I and Statement II are correct but Statement II does not explain Statement I

    (c) Statement I is correct but Statement II is not correct

    (d) Statement I is not correct but Statement II is correct

  • ‘No material price hit on CBG on revised offtake framework’

    Why in the News

    The Union Petroleum Ministry has said that the revised compressed biogas (CBG) offtake price will not translate into a material price increase for gas consumers. The assurance answers concerns raised after the Union Cabinet cleared a revised Galvanizing Organic Bio Agro Resources Dhan (GOBARdhan) scheme on 6 August, which introduced a CBG offtake price of Rs 2,110 per metric million British thermal unit (MMBtu). The Ministry states that the full offtake price will not be recovered from consumers, since a government funded affordability cushion and a much larger gas pool absorb the difference. The contested point is whether a producer facing price is being set well above the consumer facing price, and who carries the gap between the two.

    What does the revised offtake framework fix?

    1. A single administered offtake price: The revised scheme sets the price at which compressed biogas is picked up from producers at Rs 2,110 per MMBtu, replacing case by case commercial negotiation.
    2. The stated purpose is producer viability: The Ministry describes the framework as giving CBG producers a “stable and viable” price so that plants can operate “sustainably”.
    3. Two prices, not one: The offtake price and the price billed at the burner tip are set by separate mechanisms, so a movement in one does not carry through to the other.

    How is the consumer insulated from the offtake price?

    1. A direct affordability cushion: The government provides a cushion of Rs 10 per kilogram of CBG, funded from the exchequer rather than recovered in tariffs.
    2. Stacking against a wider gas pool: The biogas volume is blended into a substantially larger pool of natural gas, so its higher unit cost is diluted across the whole pool before reaching the burner tip.
    3. The two work together, not separately: The Ministry’s position rests on the cushion and the pooling operating at the same time, not on either one alone.

    Challenges to the compressed biogas offtake framework

    1. The subsidy is an open ended fiscal commitment: An affordability cushion fixed per kilogram grows in direct proportion to volume, so success in scaling the sector raises the annual outgo rather than reducing it. Eg. The blending obligation for compressed biogas in city gas networks is designed to rise year on year. Fix. Publish a declining glide path for the cushion alongside the offtake price, so producers plan against a known taper.
    2. Pooling only dilutes cost while the biogas share stays small: The wider gas pool absorbs the price difference precisely because compressed biogas is a small fraction of it, and that cushion thins as the mandated share rises. Eg. Domestic gas allocation to city gas distribution is already rationed against demand. Fix. Tie each upward revision of the blending obligation to a reassessed pooled price so the dilution assumption is tested rather than assumed.
    3. Feedstock aggregation remains the binding constraint: Plant economics turn on assured daily supply of cattle dung, press mud and agricultural residue, which no offtake price by itself organises. Eg. Several commissioned compressed biogas plants run below rated capacity for want of steady feedstock. Fix. Contract feedstock aggregation through dairy cooperatives and sugar mills at the plant approval stage, so supply is committed before capital is sunk.
    4. Fermented organic manure has no assured market: A biogas plant produces a large byproduct stream that is only viable when the manure sells, and its offtake is not covered by this price framework. Eg. Fermented organic manure competes against heavily subsidised urea on farm gate price. Fix. Extend the market development assistance already notified for organic manure to the full output of registered compressed biogas plants.

    Conclusion

    The framework sets a producer facing price and leaves the consumer facing price to be settled elsewhere, which is what the Ministry’s assurance rests on. That assurance holds only while compressed biogas remains a small share of the gas pool. The next test is the scheme’s operating guidelines, which will show whether the support is open ended or tapered and how feedstock supply is to be secured.

    Back2Basics: GOBARdhan

    1. What it is: An initiative to convert cattle dung, agricultural residue and other organic waste into biogas, compressed biogas and organic manure.
    2. Where it sits: It runs as a unified registration and monitoring framework across ministries, with the Department of Drinking Water and Sanitation operating its central registration portal.
    3. What it targets: Village level cleanliness, a rural income stream from waste, and a domestic substitute for imported natural gas.
    4. How it links to fuel policy: Compressed biogas produced under it feeds the Sustainable Alternative Towards Affordable Transportation (SATAT) offtake route into city gas distribution networks.

    Matching Previous Year Question

    “[2020] According to India’s National Policy on Biofuels, which of the following can be used as raw materials for the production of biofuels? 1. Cassava 2. Damaged wheat grains 3. Groundnut seeds 4. Horse gram 5. Rotten potatoes 6. Sugar beet Select the correct answer using the code given below: (a) 1, 2, 5 and 6 only (b) 1, 3, 4 and 6 only (c) 2, 3, 4 and 5 only (d) 1, 2, 3, 4, 5 and 6 ANSWER: (a)”

  • Problem with ethanol blending isn’t sugar — it’s reliance on grains; the way forward (Op-ed by Harish Damodaran)

    Why in the News

    India’s ethanol blended petrol (EBP) programme, an arrangement under which oil marketing companies blend ethanol into petrol to progressively raise the blending ratio, was designed primarily to help sugar mills earn an additional revenue stream so they could pay cane farmers on time. For the current supply year ending October 2026, grain based feedstock accounts for 759.8 crore litres, or 72.5 percent, of the 1,048.3 crore litres of ethanol allocated among distilleries, against 288.5 crore litres, or 27.5 percent, from sugarcane based feedstock. What began as a sugar-support programme has become a grain-dependent one, and the article argues this reversal, not sugar diversion, is the programme’s real problem.

    What is the Ethanol Blended Petrol (EBP) programme?

    1. About: The EBP programme requires oil marketing companies to blend ethanol into petrol at a rising target ratio, currently 20 percent under the E20 standard, to cut crude oil imports and support farm incomes.
    2. Feedstock: Ethanol can be produced from sugarcane derived molasses and juice, or from cereal grains such as maize and rice, through milling, starch extraction, fermentation, distillation and dehydration to 99.9 percent pure alcohol.
    3. Original design: The programme was conceived to give sugar mills a secondary revenue stream so they could clear cane payment dues to farmers, and was later extended to maize farmers as an additional demand source.

    How did the feedstock mix shift from sugarcane to grain?

    1. The molasses-only phase, till 2017-18: All ethanol supplied to oil marketing companies came from C-heavy molasses, the final byproduct of cane juice processing left after mills had recovered all economically extractable sugar.
    2. The B-heavy and direct-juice phase, from 2018-19: Mills began producing ethanol from intermediate B-heavy molasses and directly from cane juice or syrup, incentivised by higher government-set prices for ethanol from these routes, which let mills divert sucrose before it was even crystallised into sugar. Ethanol supplies to oil marketing companies rose from 38 crore litres in 2013-14 to 190 crore litres in 2018-19, and blending rose from 1.6 percent to 4.9 percent over the same period.
    3. The grain takeover, 2018-19 onward: Standalone grain-based distilleries, running on maize or on surplus and damaged rice sourced from the Food Corporation of India (FCI) or the open market, expanded independently of the sugar season. By 2023-24, grain-based feedstock supplied 402 crore litres, or 59.7 percent, of the 673 crore litre total that helped achieve 14.6 percent average blending, a reversal the article calls the tail wagging the dog.
    4. Current supply year, 2025-26: Of the 1,048.3 crore litres allocated to hit the E20 target, 759.8 crore litres, or 72.5 percent, is from grains and only 288.5 crore litres, or 27.5 percent, is from sugarcane-based feedstock, against a backdrop of September-ending sugar stocks projected at a 17-year low.

    Why is rice, not maize, now the likely mainstay feedstock?

    1. Maize supply risk: El Nino conditions are expected to persist through the first half of next year, raising doubts about maize availability for ethanol in 2026-27 even as sugarcane diversion is curtailed.
    2. Rising reliance on FCI rice: The government allocated 5.2 million tonnes of surplus FCI rice to ethanol distilleries for 2025-26, raised to 7.2 million tonnes in July; at 450 to 460 litres of ethanol per tonne, that yields only 325 to 330 crore litres, well short of the roughly 1,050 crore litres needed to sustain E20.
    3. Rice is water-intensive and underpriced for this use: FCI rice is sold to ethanol distilleries at Rs 23.2 per kg, with a reserve price of Rs 21 per kg for fully broken grains, against a retail market price of Rs 40 per kg for normal rice and Rs 30 per kg for broken rice, and rice is a water-guzzling crop to be diverting toward fuel at scale.
    4. Distillery capacity outpaces demand: Distillers have built an aggregate ethanol production capacity of nearly 2,000 crore litres, against 421 crore litres in 2014 and current annual offtake of 1,050 crore litres, and it is this installed capacity, not farmer need, that is driving the push for even higher blending standards such as E22, E25, E27 and E30.

    What effect has the programme had on maize farmers, and what is at risk if grain reliance deepens further?

    1. Maize price gains: With ethanol demand added to poultry and livestock feed demand, wholesale maize prices in India rose from a Rs 13.8 to Rs 17.8 per kg range in 2021 to a Rs 22.1 to Rs 24.5 range in 2024, benefiting maize growers the way the programme once benefited cane farmers.
    2. A rice-driven repeat of the same trade-off: Sustaining current blending targets without sugar or adequate maize would require earmarking still more FCI rice, a shift the article argues is difficult to justify given rice’s water footprint and its underpriced diversion from the food security stock.

    Way Forward

    1. Discourage standalone grain distilleries reliant on FCI rice: The government should end this diversion route and push distillers toward less water-intensive grains such as bajra and jowar, which carry 58 to 62 percent recoverable starch and can yield 380 to 400 litres of ethanol per tonne, comparable to maize, letting millet farmers gain the same price benefit maize growers have seen.
    2. Stop chasing blending targets ahead of schedule: The EBP programme was already succeeding at 10 to 15 percent blending, and the article notes the government’s own chief economic adviser has suggested reverting to the E10 standard, an argument the piece endorses as pragmatic rather than a retreat.

    Back2Basics: What is the E10/E20 standard?

    1. E10 and E20 denote the percentage of ethanol blended into petrol, so E20 petrol contains 20 percent ethanol against 80 percent petrol by volume.
    2. India crossed the E10 blending average in 2021-22 and reached the E20 national average in the current 2025-26 supply year, years ahead of the original 2030 target set for E20.
    3. Government notified fuel standards now extend beyond E20 to E22, E25, E27 and E30, reflecting distillery capacity built well beyond current ethanol offtake.

    Matching Previous Year Question

    PrelimsPYQ.csv: “In the context of alternative sources of energy, ethanol as a viable bio-fuel can be obtained from:” (2009, Microtheme: Biofertilizers/Fuels, Subject: Environment)

  • Policy mistakes, not ethanol, behind sugar price rise (Editorial)

    Why in the News

    Retail sugar prices have risen from an average of Rs 45 to Rs 65 per kg within a month, and the increase is being widely blamed on the ethanol blended petrol programme. Only 27.5 percent of the ethanol supplied by distilleries to oil marketing companies in 2025-26 came from sugarcane juice and molasses, with the balance from cereal grains, and the roughly 3 million tonnes of sugar diverted for ethanol is close to a tenth of the year’s 30.9 million tonne gross production. Similar or larger diversions in the four preceding sugar years did not cause comparable price spikes, which places the blame elsewhere.

    Is ethanol actually responsible for the price spike?

    1. Small diversion share: The estimated 3 million tonnes of sugar diverted to ethanol production is close to a tenth of the 30.9 million tonne gross sugar output for the year ending September 2026.
    2. No precedent for a price link: The four preceding sugar years saw diversions of 3.5 million tonnes, 2.4 million tonnes, 4.3 million tonnes and 3.6 million tonnes respectively, all without triggering a comparable price spiral.
    3. Feedstock mix has shifted away from sugar already: Only 27.5 percent of ethanol supplied to oil marketing companies in 2025-26 came from sugarcane juice and molasses, with the rest from cereal grains, so the programme is no longer primarily a sugar diversion story.

    What actually explains the price spurt?

    1. A large output shortfall: Gross sugar production for the year came in well below the initial 34.4 million tonne projection made at the start of crushing in November, a shortfall of 3.5 million tonnes.
    2. A late government response: Mills in Uttar Pradesh and Maharashtra were struggling to get cane and shutting down crushing operations by February, but the shortfall was not addressed until exports were banned only in mid-May.
    3. Panic measures after prices soared: From July, as a deficient June monsoon raised concerns about cane yields for 2026-27, the government imposed a 400 tonne stock limit with a 30 day holding cap on all dealers and ordered mills to furnish details of bulk buyers who purchased 500 tonnes or more.

    What should the government have done instead?

    1. Keep the import window open: Rather than banning exports, the government could have cut the tariff on raw and white sugar imports from 100 percent to zero by April, when most mills had stopped crushing.
    2. Rely on market intelligence over controls: The sugar industry runs on government-set controls, from cane pricing to how much a mill may sell in a given month, a control structure this crisis exposed as failing to anticipate and balance supply and demand.

    Conclusion

    The editorial’s central claim is that the sugar price rise is a policy failure, rooted in a delayed response to an anticipated output shortfall and a subsequent set of panic controls, not a consequence of the ethanol blending programme. The remedy it points to, opening the import window through tariff cuts rather than export bans and stock limits, remains untested by the government to date.

    Matching Previous Year Question

    PrelimsPYQ.csv: “Statement I: Of the two major ethanol producers in the world, i.e., Brazil and the United States of America, the former produces more ethanol than the latter. Statement II: Unlike in the United States of America, where corn is the principal feedstock for ethanol production, sugarcane is the principal feedstock for ethanol production in Brazil.” (2025, Microtheme: Biofertilizers/Fuels, Subject: Environment)

  • Ethanol blending policy is behind rise in sugar prices, says Opposition

    Ethanol blending policy is behind rise in sugar prices, says Opposition

    Why in the News

    Retail sugar prices reached Rs 62.5 to Rs 64 per kg in Maharashtra and Rs 63 to Rs 64 per kg in Karnataka on 20 August. The corresponding ranges on 1 August were Rs 46.2 to Rs 46.9 and Rs 46.25 to Rs 47 per kg, with Uttar Pradesh at Rs 44.95 to Rs 46.7. Closing stocks for the 2025-26 sugar season are set to fall to a nine-year low on a production shortfall. The ethanol blending programme has been named as the cause of the spike. What is contested is whether diverting cane to fuel drove the price rise, or whether a crop failure larger than the diversion did.

    What is the Ethanol Blended Petrol Programme?

    1. A fuel substitution programme run through sugar mills: The Ethanol Blended Petrol (EBP) Programme requires oil marketing companies to blend ethanol into petrol, and it sources that ethanol partly from sugarcane. It runs under the National Policy on Biofuels, 2018.
    2. Cane can be diverted at three points: Mills may make ethanol from direct sugarcane juice or syrup, from B-heavy molasses, or from C-heavy molasses, each of which sacrifices a different quantity of sugar.
    3. The 20 per cent target was met early: The blending target of 20 per cent ethanol in petrol was achieved ahead of its 2025-26 deadline.
    4. It exists to fix mill finances as much as fuel imports: Diversion gives mills a buyer who pays on delivery, which shortens the cane payment cycle to farmers and cuts crude oil imports at the same time.

    What is sugar recovery?

    1. Recovery is the yield of the crush: Recovery rate is the sugar produced expressed as a percentage of the cane crushed, and it decides how much sugar a given tonnage of cane actually yields.
    2. It is set in the field, not the mill: Recovery depends on sucrose accumulated in the cane stalk, which needs sunlight and aeration in the ripening months, so a waterlogged crop lowers recovery even where tonnage holds up.

    What are B-heavy and C-heavy molasses?

    1. Molasses grades mark how much sugar is left behind: Molasses is the residue after sugar crystals are extracted, and B-heavy molasses is drawn off at an earlier stage than C-heavy molasses, so it retains more fermentable sugar.
    2. The grade decides the sugar sacrificed: One tonne of ethanol from C-heavy molasses costs almost no sugar, B-heavy costs more, and direct juice or syrup costs the most, which is why diversion policy is set grade by grade.

    India’s sugar balance sheet: what do the numbers show?

    Sugar Year (Oct-Sep)Opening StocksDomestic OutputDomestic ConsumptionExportsClosing Stocks
    2016-1772.5202.62244.480.4639.41
    2017-1839.41323.28253.96.32104.71
    2018-19104.71331.6225538143.33
    2019-20143.33273.8525359.4104.78
    2020-21104.78311.22607283.98
    2021-2283.98359.2526211071.23
    2022-2371.233312816457.23
    2023-2457.23319295180.23
    2024-2580.23261.8284850.03
    2025-26*50.03279280841.03

    All figures in lakh tonnes. *Industry estimates. Source: National Federation of Cooperative Sugar Factories Ltd.

    1. The season starts with just over 50 lakh tonnes: Opening stocks for 2025-26 stood at 50.03 lakh tonnes, so total sugar available after adding production works out to about 329 lakh tonnes.
    2. Consumption and exports leave 41 lakh tonnes: Deducting domestic consumption of 280 lakh tonnes and exports of 8 lakh tonnes closes the season at around 41 lakh tonnes.
    3. That is the lowest in nine years: The last time closing stocks were lower was 39.41 lakh tonnes in 2016-17.
    4. A disputed opening figure makes it worse: Some in the industry hold that opening stocks were only 48 lakh tonnes rather than 50.03 lakh tonnes, which would take closing stocks to 39 lakh tonnes, the lowest since 2008-09.
    5. The peak was three seasons of surplus: Closing stocks ran to 143.33 lakh tonnes in 2018-19 and were still 104.78 lakh tonnes in 2019-20, so the current tightness follows a period of overhang, not chronic scarcity.

    Why did production fall so far below projection?

    1. The apex body projected a large crop: The Indian Sugar and Bio-energy Manufacturers Association (ISMA), the association of private sugar mills, estimated gross production for the 2025-26 season at 343.5 lakh tonnes in early November 2025. After 34 lakh tonnes of ethanol diversion, it pegged net output at 309.5 lakh tonnes.
    2. The actual crop came in far smaller: Latest industry estimates put gross production at 309 lakh tonnes and ethanol diversion at 30 lakh tonnes, leaving net output at 279 lakh tonnes. Net output is therefore 30.5 lakh tonnes below the 309.5 lakh tonnes originally projected on a net basis.
    3. Excess rain hit the crop at the wrong time: The cane crop in Maharashtra, Karnataka and Gujarat suffered excess rainfall in September and October last year, with a delayed withdrawal of the southwest monsoon.
    4. Waterlogging cut both tonnage and recovery: Waterlogged fields combined with a lack of sunshine deprived the standing crop of aeration and daylight. That affected cane growth and sucrose accumulation in the stalks, lowering yields and mill recovery.
    5. The two tropical States missed badly: ISMA had projected Maharashtra at 130 lakh tonnes and Karnataka at 63.5 lakh tonnes, and their mills produced only 99.2 lakh tonnes and 47.2 lakh tonnes.
    6. Uttar Pradesh lost output to disease and pest: Factories in the State produced 89.7 lakh tonnes against an earlier estimate of 103.2 lakh tonnes. Red rot fungal disease and the top shoot borer insect pest were the chief causes, and the dominant Co-0238 cane variety has grown increasingly susceptible to both.

    What turned a shortfall into a price spike?

    1. Prices were flat for most of the season: Average ex-factory prices in Maharashtra fell from Rs 38.31 to Rs 36.98 per kg between September 2025 and April 2026, then recovered to Rs 38.23 by June. They rose from July, averaging Rs 41.85 per kg that month.
    2. Declared mill stocks were doubted: Some liquidity-strapped mills had already sold sugar beyond their government-fixed monthly release quotas and had little left. The stocks they declared existed on paper.
    3. A second bad monsoon was priced in early: High rainfall deficiency in June, particularly in Maharashtra and Karnataka, convinced the trade that yields and production would take a hit in the 2026-27 season as well.
    4. Buyers and sellers both moved first: Larger merchants, stockists and bulk industrial consumers began taking positions before July. From August some mills started holding back sales in anticipation of higher prices ahead of the festival season.

    Where does India’s ethanol actually come from?

    1. Sugarcane supplies under a third: Of 810.67 crore litres of ethanol supplied to oil marketing companies for blending between November 2025 and July 2026, only 259.24 crore litres or 32 per cent came from sugarcane-based feedstock.
    2. Direct juice and syrup is the largest cane route: Direct juice or syrup contributed 147.6 crore litres, B-heavy molasses 98.19 crore litres and C-heavy molasses 13.45 crore litres.
    3. Grain supplies the balance: Distilleries using grain-based feedstock supplied 551.43 crore litres or 68 per cent of the total.
    4. Maize leads the grain feedstock: Maize accounted for 288 crore litres, Food Corporation of India rice 207.1 crore litres and broken or damaged foodgrains 56.33 crore litres.

    Is ethanol diversion the cause of the spike or a scapegoat for a crop failure?

    1. The diversion looks large in isolation: Thirty lakh tonnes of sugar went into ethanol in the current season, which is more than two-thirds of the season’s projected closing stock.
    2. The crop failure was larger than the diversion: Gross production before any diversion came in 34.5 lakh tonnes below the initial gross estimate of 343.5 lakh tonnes, so the sugar lost to the weather exceeded the sugar lost to fuel.
    3. Two-thirds of blended ethanol never touched cane: The blending target is being met mainly out of maize and rice, so cutting cane diversion to zero would remove only a third of the programme’s feedstock demand and not a third of the price.
    4. Reversing diversion moves the problem, it does not remove it: Ethanol sales are the payment stream that lets mills clear cane dues on time, so a ban on juice and B-heavy diversion converts a consumer price problem into a farmer arrears problem.

    What has the government done to check sugar prices?

    1. Exports banned on 13 May: All sugar exports were banned until 30 September 2026. It was a precautionary move rather than a response to a confirmed shortage.
    2. Duty-free imports opened this week: Import of up to 10 lakh tonnes of raw sugar at zero duty was allowed until 31 October, against the standard tariff of 100 per cent on the sweetener.
    3. Refiners at Kandla will process the raws: The raw sugar can be processed by companies operating refineries at Gujarat’s Kandla port, such as Shree Renuka Sugars and Shri Dutta India Private Ltd. The refined output can supply the market until Indian mills begin cane crushing from end-October to early November.
    4. Stock limits imposed on 28 July: A stocking limit of 400 tonnes was imposed on all sugar dealers, and no dealer may hold any sugar beyond 30 days of receiving it.
    5. Bulk buyers put under disclosure on 13 August: Mills were directed by letter to furnish details of bulk consumers such as soft drink and confectionery makers and sweetmeat sellers who bought 500 tonnes or more annually, directly or through agents, during the 2025-26 financial year.
    6. A diversion curb is expected next: The government is expected to direct mills not to manufacture ethanol from direct sugarcane juice and B-heavy molasses in the 2026-27 season, on the stated priority of augmenting domestic sugar supply.

    Challenges to the Ethanol Blended Petrol Programme

    1. Grain has crowded out cane as feedstock: Grain-based distilleries now supply more than twice the volume the cane routes do, which shifts the food security question from sugar to cereals. Eg. Food Corporation of India rice was released to distilleries in the current supply year. Fix. Cap grain feedstock at a notified share of annual blending and reserve open market cereal releases for the public distribution system.
    2. Procurement prices have not tracked cane costs: Ethanol procurement prices have stayed largely stagnant as the Fair and Remunerative Price for cane has risen, squeezing distillery margins. Eg. Cane FRP rose from Rs 285 per quintal in 2020-21 to Rs 355 per quintal in 2025-26. Fix. Index the ethanol procurement price for each feedstock route to the notified cane price through a published formula.
    3. Distillation capacity sits underused: Mills built distilleries on the expectation of assured diversion, and capacity idles whenever policy switches back to sugar. Eg. Many mills face underutilised distillation capacity in the current season. Fix. Publish a three-year rolling diversion band so investment decisions are made against a stated range rather than an annual notification.
    4. Higher blends carry a vehicle cost: Ethanol has a lower energy density than petrol, so fuel efficiency falls by roughly 2 to 6 per cent at higher blend levels and older engines face material compatibility issues. Eg. Vehicles manufactured before E20 compliance norms were not certified for the current blend. Fix. Mandate a labelled dual fuel dispensing option at retail outlets so owners of non-compliant vehicles retain a lower blend choice.
    5. Cane ethanol carries a heavy water footprint: Sugarcane is grown largely in water-stressed tropical districts, so cane-based ethanol transfers an irrigation burden to the fuel sector. Eg. Maharashtra and Karnataka face groundwater depletion in the same belts that supply mill cane. Fix. Restrict juice and B-heavy diversion licences to mills that have converted a notified share of their command area to drip irrigation.

    Conclusion

    The sugar price spike is the result of a crop that came in 34.5 lakh tonnes below projection in gross terms, stocks doubted by the trade and positions taken ahead of the festival season, not of ethanol diversion that supplied under a third of blended fuel. The government has answered on the supply side, with an export ban, duty-free raw imports, dealer stock limits and bulk-buyer disclosure. A curb on cane-based ethanol in 2026-27 would trade a consumer price problem for a cane arrears problem. The season will close on the tightest stock position in nine years, and next season’s crop is already being discounted for a deficient June.

    “[2025] Consider the following statements:

    Statement I: Of the two major ethanol producers in the world, i.e., Brazil and the United States of America, the former produces more ethanol than the latter.

    Statement II: Unlike in the United States of America, where corn is the principal feedstock for ethanol production, sugarcane is the principal feedstock for ethanol production in Brazil.

    Which one of the following is correct in respect of the above statements?

    (a) Both Statement I and Statement II are correct and Statement II explains Statement I

    (b) Both Statement I and Statement II are correct but Statement II does not explain Statement I

    (c) Statement I is correct but Statement II is not correct

    (d) Statement I is not correct but Statement II is correct

  • Oil companies reject contamination claims against E20 petrol

    Why in the News

    Oil marketing companies rejected contamination allegations against E20 petrol after pan India testing, highlighting concerns over fuel quality, engine compatibility and consumer confidence.

    What is the Ethanol Blending Programme?

    • Objective: Reduce crude oil import dependence, improve energy security and support farmers.
    • E20: Petrol containing 20% ethanol.
    • India achieved the E20 blending target ahead of its earlier 2030 deadline.
    • Key Feedstocks: Sugarcane and molasses. Maize, and Surplus rice and other approved agricultural feedstocks

    Technical Trade-offs

    • Lower energy density: May reduce fuel economy.
    • Engine compatibility: Older vehicles may require compatible components.
    • Higher octane: Ethanol has a high octane rating and can improve combustion characteristics.

    “[2020] According to India’s National Policy on Biofuels, which of the following can be used as raw materials for the production of biofuels?
    1. Cassava
    2. Damaged wheat grains
    3. Groundnut seeds
    4. Horse gram
    5. Rotten potatoes
    6. Sugar beet
    Select the correct answer using the code given below:
    (a) 1, 2, 5 and 6 only
    (b) 1, 3, 4 and 6 only
    (c) 2, 3, 4 and 5 only
    (d) 1, 2, 3, 4, 5 and 6

  • Ethanol policy must count in water, sustainability costs

    Why in the News

    India has achieved nearly 20% ethanol blending (E20) in petrol by 2025, making it one of the world’s largest biofuel programmes. As the blending target is achieved, attention is shifting from quantity to the programme’s water use, life cycle emissions and energy efficiency.

    What is the E20 Ethanol Blending Programme?

    1. Definition: E20 is petrol blended with 20% ethanol.
    2. Progress: Ethanol blending increased from about 1.5% in 2013-14 to nearly 20% in 2025, with annual consumption of around 700 crore litres.
    3. Benefits: Reduces crude oil imports, boosts farmers’ income and strengthens energy security. Ethanol is often described as a low-carbon fuel because sugarcane absorbs atmospheric carbon dioxide during growth.

    What is Energy Return on Energy Invested (EROEI)?

    1. Definition: EROEI measures the usable energy obtained from a fuel relative to the energy spent producing it.
    2. Sugarcane Ethanol: EROEI of about 2 to 4 due to efficient bagasse based distilleries.
    3. Grain Ethanol: EROEI ranges from 1.2 to 2 because of higher fossil fuel inputs.
    4. Significance: Higher EROEI indicates a more energy efficient fuel.

    Why is water the biggest concern?

    1. High Water Demand: Estimates by the Commission for Agricultural Costs and Prices and NITI Aayog suggest that sugarcane requires 1,500 to 2,500 mm of water during cultivation.
    2. Large Water Footprint: Producing one litre of sugarcane ethanol may consume 2,000 to 3,500 litres of water.
    3. Groundwater Stress: Major sugarcane growing states already face groundwater depletion.
    4. Resource Trade-off: Excessive ethanol production may replace oil dependence with freshwater dependence.
    5. Distorting Subsidies: Subsidised electricity and fertilisers encourage over extraction of groundwater and excessive fertiliser use. Subsidised urea promotes overuse of nitrogen fertilisers.

    What are the other challenges?

    1. Lower Energy Density: Ethanol contains about 21 MJ/litre, compared to 32 MJ/litre for petrol, reducing fuel efficiency by about 6 to 7% under E20 blends. However, ethanol has a much higher octane rating, allowing engines specifically calibrated for higher ethanol blends to achieve more efficient combustion and partially offset this disadvantage. The overall outcome depends on engine design rather than fuel properties alone.
    2. Life Cycle Emissions: Sugarcane ethanol can reduce emissions by 50 to 70%, while grain ethanol offers 20 to 50% reduction, depending on production methods.
    3. Vehicle Compatibility: E20 can corrode certain engine components in older vehicles. Vehicles manufactured from April 2023 onwards are required to be E20 compatible.

    Conclusion

    India’s ethanol programme represents an important step towards greater energy security, but its long-term success will depend on aligning environmental objectives with sound economics. A resilient biofuel strategy must be guided by transparent life-cycle carbon accounting, rigorous assessment of water use, technology-neutral incentives and market signals that reflect the true value of natural resources.

    PYQ Relevance

    [2020] According to India’s National Policy on Biofuels, which of the following can be used as raw materials for the production of biofuels?
    1. Cassava

    2. Damaged wheat grains

    3. Groundnut seeds

    4. Horse gram

    5. Rotten potatoes

    6. Sugar beet
    Select the correct answer using the code given below:
    (a) 1, 2, 5 and 6 only (b) 1, 3, 4 and 6 only (c) 2, 3, 4 and 5 only (d) 1, 2, 3, 4, 5 and 6

  • Consider the following kinds of organisms

    Consider the following kinds of organisms:
    1. Bacteria
    2. Fungi
    3. Flowering plants
    Some species of which of the above kinds of organisms are employed as biopesticides?

  • Consider the following statements

    Consider the following statements:

    Statement I: Of the two major ethanol producers in the world, i.e., Brazil and the United States of America, the former produces more ethanol than the latter.

    Statement II: Unlike in the United States of America, where corn is the principal feedstock for ethanol production, sugarcane is the principal feedstock for ethanol production in Brazil.

    Which one of the following is correct in respect of the above statements?

  • In the context of alternative sources of energy, ethanol as a viable bio-fuel can be obtained from

    In the context of alternative sources of energy, ethanol as a viable bio-fuel can be obtained from: