The report noted that the announcement is likely after the conclusion of upcoming State Assembly elections.

In a key policy change, the government has, from November 1, 2025, allowed the use of all sugarcane-based feedstocks-including cane juice, syrup, B-heavy molasses and C-heavy molasses-for ethanol production. This marks a major shift, as earlier restrictions were in place due to limited sugarcane availability.

The report said the sugar sector currently contributes around 30% to India's ethanol production, and this share is expected to rise further following the relaxation, Agrowon reported.

Out of the estimated 335 lakh tonnes of sugar (raw value) to be produced in the current season, around 35 lakh tonnes are likely to be diverted towards ethanol production. In addition, the Food Corporation of India has made 52 lakh tonnes of rice available exclusively for distilleries. The price for ethanol produced from maize has been kept unchanged at Rs 71.86 per litre for the 2025-26 ethanol supply year.

The report also highlighted concerns over pending payments to farmers. Of the total dues of Rs 74,500 crore, about 80% has been cleared, while nearly Rs 15,000 crore remains unpaid. Karnataka now has the highest pending dues at Rs 4,450 crore, followed by Maharashtra with Rs 2,770 crore. Dues in Uttar Pradesh have also increased significantly. This marks a notable shift, as Karnataka had no such backlog in the previous two financial years.

On pricing, the Fair and Remunerative Price (FRP) for sugarcane has been fixed at Rs 3,550 per tonne for the 2025-26 season, reflecting a 4% increase. However, the minimum selling price (MSP) of sugar has remained unchanged at Rs 31,000 per tonne since 2019, putting pressure on sugar mills' margins.

The report further noted that of the 20 lakh tonnes of raw sugar approved for export, only about 9 lakh tonnes are expected to be shipped by September 2026.