"Sugar Price Spike Traced to Policy Failures, Not Ethanol Diversion"
Ethanol Blended Petrol (EBP) Programme
government scheme mandating ethanol mixing in petrol to cut oil imports and emissions.
Fair and Remunerative Price (FRP)
statutory minimum price mills must pay sugarcane farmers, fixed by the Union Cabinet.
India is among the world's largest producers and consumers of sugar, with annual gross production typically ranging between 32 and 34 million tonnes against domestic consumption of roughly 28 to 29 million tonnes. This structural surplus historically depressed mill revenues and delayed payments to sugarcane farmers. To address this twin problem, the government developed the Ethanol Blended Petrol (EBP) Programme, originally launched in 2003 under the Ministry of Petroleum and Natural Gas, with the threefold purpose of reducing crude oil import dependence, improving the financial health of sugar mills, and lowering vehicular emissions.
The programme's policy backbone is the National Policy on Biofuels (NPB), first notified in 2009 and substantially revised in 2018. The 2018 revision expanded the permissible feedstock basket beyond sugarcane molasses to include surplus and damaged food grains — rice, maize, and broken wheat — from Food Corporation of India (FCI) central pool stocks. It also classified biofuels into Generation 1 (1G), covering sugarcane and grains, and Generation 2 (2G), covering agricultural residues and lignocellulosic material. The NITI Aayog Roadmap for Ethanol Blending 2020–25, published in 2021, formalised this shift toward grains, noting that sugarcane alone could not sustain a 20% blending target. India achieved the E20 target in 2025, five years ahead of the original schedule.
Price control in the sugar sector involves multiple instruments. The government fixes the Fair and Remunerative Price (FRP) for sugarcane, regulates sugar release through monthly quotas, and can impose stock limits on traders under the Essential Commodities Act. Import duties and export bans are used to manage supply at the border, while the Ministry of Consumer Affairs, Food and Public Distribution monitors the retail supply chain.
Ethanol for blending can be produced from three broad sugarcane-based routes and one grain-based route. The C-heavy molasses route uses the final, non-crystallisable byproduct of sugar refining. The B-heavy molasses route taps an intermediate stage, diverting some sucrose before full crystallisation. The direct cane juice or syrup route bypasses crystallisation entirely, maximising ethanol yield per tonne of cane but reducing sugar output most sharply. The grain-based route uses rice, maize, or broken wheat processed in dedicated distilleries, many of which draw from FCI central pool stocks.
Supply flows through Oil Marketing Companies (OMCs) — principally Indian Oil Corporation, BPCL, and HPCL — which issue annual tenders to licensed distilleries. The government fixes administered prices for ethanol from each feedstock category, with grain-based ethanol attracting the highest administered price. This price architecture was designed to incentivise diversification away from sugarcane, and it has succeeded: in 2025–26, only 27.5% of ethanol supplied to OMCs came from sugarcane juice and molasses, while nearly three-fourths came from cereal grains, with maize emerging as the dominant feedstock. …
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?
Which of the following factors/policies were affecting the price of rice in India in the recent past?
1.Minimum Support Price
2.Government's trading
3.Government's stockpiling
4.Consumer subsidies
Select the correct answer using the code given below:
What are the causes of persistent high food inflation in India? Comment on the effectiveness of the monetary policy of the RBI to control this type of inflation.
Consider the following statements regarding India's Ethanol Blended Petrol (EBP) Programme:
1.The National Biofuel Policy, 2018 set a target of 20% ethanol blending in petrol by 2025–26.
2.In 2025–26, sugarcane juice and molasses accounted for more than half of the ethanol supplied to oil marketing companies.
3.Ethanol can be produced from cereal grains in addition to sugarcane-based feedstocks.
How many of the above statements are correct?
Consider the following pairs:
Government Instrument — Primary Purpose in Sugar Sector
1.Fair and Remunerative Price (FRP) — Sets minimum price mills must pay to sugarcane farmers
2.Monthly release quota — Caps how much sugar each mill can sell in the open market per month
3.Stock limit under Essential Commodities Act — Restricts how much sugar a dealer can hold to curb hoarding
4.Import duty on sugar — Currently set at zero to keep domestic prices stable
How many of the above pairs are correctly matched?
With reference to India's sugar sector, consider the following statements:
Statement I: The 2025–26 sugar production shortfall of approximately 3.5 million tonnes was the primary cause of the retail price spike, not ethanol diversion.
Statement II: Ethanol diversion from sugarcane in 2025–26 was roughly a tenth of gross sugar production for that year.
Which one of the following is correct in respect of the above statements?
Which of the following factors/policies affect the retail price of sugar in India?
1.Fair and Remunerative Price (FRP) fixed by the government
2.Monthly release quotas imposed on sugar mills
3.Import duty on raw and white sugar
4.Ethanol blending targets under the National Biofuel Policy
Select the correct answer using the code given below:
Consider the following statements regarding India's sugar price management:
1.The Essential Commodities Act empowers the government to impose stock limits on sugar dealers.
2.Duty-free import approvals for sugar are used as a routine annual measure to supplement domestic production.
3.Export bans on sugar are a demand-side tool to reduce domestic consumption.
Which of the statements given above is/are correct?
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