Sugar Stocks Rally as Government Lifts Ethanol Production Caps, Supreme Court Upholds E20 Rollout
This policy shift follows two consecutive years of strong monsoon rains, which have boosted sugarcane cultivation and supplies.
Sugar stocks surged in early trade on September 2 after the Indian government removed restrictions on ethanol production from sugarcane juice, syrup, and molasses for the 2025–26 year. The Ministry of Consumer Affairs, Food & Public Distribution announced that starting November 1, mills and distilleries can produce ethanol without any quantitative cap, though periodic reviews will ensure adequate domestic sugar availability.
This policy shift follows two consecutive years of strong monsoon rains, which have boosted sugarcane cultivation and supplies. The decision is expected to accelerate India’s ethanol blending targets and provide sugar producers with additional revenue opportunities.
The stock market reacted swiftly. Balrampur Chini Mills shares traded around ₹581.05, up 7.3 percent, while Shree Renuka Sugars climbed to ₹32.47, gaining 12.2 percent. Uttam Sugar Mills jumped over 9 percent, with Dhampur Sugar Mills and Magadh Sugar & Energy each up around 10 percent. Bajaj Hindusthan Sugar and Godavari Biorefineries advanced about 8 percent, while Triveni Engineering, Dwarikesh Sugar, and other producers rose between 4 and 6 percent.
The rally comes a day after the Supreme Court dismissed a plea challenging the nationwide rollout of E20 fuel, or petrol blended with 20 percent ethanol. The petitioner argued that vehicles manufactured before April 2023 were incompatible with such fuel, but the Court upheld the policy, emphasizing its environmental and economic benefits. Attorney General R Venkataramani noted that the plan had been extensively reviewed and highlighted its importance in supporting sugarcane farmers and reducing India’s reliance on oil imports.
Together, the policy shift and the Supreme Court ruling signal strong government support for ethanol blending initiatives. The move not only helps stabilize farmer incomes by creating an additional market for sugarcane but also aligns with India’s clean fuel strategy. Investor sentiment toward sugar companies has strengthened as the industry prepares for a more profitable 2025–26 season, driven by higher ethanol demand and robust sugarcane production.