India’s sugar industry, which has been grappling with surplus stock and challenges related to ethanol price determination, has received significant policy relief. The central government has recently announced two major policy decisions for the 2025-26 season. First, it has approved sugar exports, and second, it has removed the export duty on molasses.
Let’s understand how these changes will impact the Indian sugar industry and what they mean for investors.
What’s Happening?
On November 7, Union Food Minister Pralhad Joshi wrote to Karnataka Chief Minister Siddaramaiah, informing him that the government has approved the export of 1.5 million tonnes of sugar for the 2025-26 sugar season, which began in October. The decision aims to protect the interests of sugarcane farmers and improve cash flows in the sugar industry.
Alongside this, the Centre has also abolished the 50% export duty on molasses. The government announced this move as part of a series of policy measures designed to support sugarcane farmers across the country and enhance liquidity for sugar mills.
Sugar Production to Jump 16%
According to the Indian Sugar Mills Association (ISMA), India’s total sugar production is expected to rise by 16% to 34.35 million tonnes in 2025-26, compared to 29.65 million tonnes last year. This surge in production is driven by a better monsoon, increased sugarcane availability, and favourable weather conditions in major producing states such as Uttar Pradesh, Maharashtra, and Karnataka.
ISMA noted that India has a sufficient sugar balance this year, making it capable of exporting around 2 million tonnes. However, the central government has permitted the export of 1.5 million tonnes for the 2025-26 season while also removing the 50% export duty on molasses. This move is expected to help balance the domestic market, improve liquidity for sugar mills, and accelerate payment cycles for farmers.
Less Ethanol, More Sugar for Export
India, which remained the world’s second-largest sugar exporter until 2022-23, exported an average of 6.8 million tonnes of sugar over the past five years. However, due to drought conditions, the government restricted exports to only 1 million tonnes in 2023-24. Now, with less sugar being diverted for ethanol production in the 2025-26 season, a surplus is expected to rise. Industry experts believe the government should consider doubling exports to 2 million tonnes to maintain domestic market stability.
The National Federation of Cooperative Sugar Factories (NFCSF) has suggested that mills be allowed to begin exports early, enabling them to start raw sugar production at the beginning of the season. India will have only a three-month export window, as Brazil’s new crop could later exert downward pressure on global prices. Domestic prices are currently high, but export parity is expected by December, which would make exports more viable.
What’s in it for Investors?
On November 7, 2025, after the government allowed the export of 1.5 million tonnes of sugar and removed the 50% export duty on molasses, the sugar sector witnessed a positive reaction in the market. In early trade, Balrampur Chini Mills rose 4.21% to Rs 450.75, Shree Renuka Sugars gained 3.52% to Rs 28.81, and Triveni Engineering was up 1% to Rs 364.85. Meanwhile, Dalmia Bharat Sugar and Bajaj Hindusthan Sugar also recorded gains of around 3%.
This policy decision is likely to improve the cash flow position and profit margins of sugar mills. Higher exports will help reduce stock inventories and boost sales of ethanol and related products. Overall, the move is a positive signal for strengthening the profitability of the sugar sector.
What’s Next?
According to Deepak Ballani, Director General of the Indian Sugar and Bio-Energy Manufacturers Association (ISMA), India is likely to export around 2 million tonnes of sugar in the 2025-26 season. The country’s sugar output is estimated at 30.95 million tonnes, which is 18.5% higher than last year.
As per ISMA, about 3.4 million tonnes of sugar will be diverted for ethanol production this year, compared to the earlier estimate of 4.5–5 million tonnes. Out of the total ethanol allocation, only 28% has been assigned to sugar-based ethanol, while the remaining share has gone to feed-based plants. The reduction in ethanol diversion will increase sugar surplus, creating an opportunity for India to expand exports.
Overall, this policy could bring long-term relief not only to sugarcane farmers but also to sugar mills and investors.
*The companies mentioned in the article are for information purposes only. This is not investment advice.
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