The Economic Times (ET): How does ISMA view the Centre’s decision to permit an additional 5 lakh tonnes (LT) of sugar exports, raising the total for the 2025-26 season to 20 LT, and does it consider this quota adequate or in need of further increase?
Deepak Ballani (DB): Out of the 15 lakh tonnes sugar exports permitted in November 2025, only around 4 LT has been exported and contracted, indicating that global market conditions and commercial viability remain quite challenging. In this context, the additional 5 LT export allowance may not substantially change the industry’s overall position. However, some incremental quantity may move out of the country, which will provide very limited support to the domestic sugar balance sheet. For a more meaningful impact on liquidity, prices, and timely cane payments, a stable and forward-looking policy framework would be essential.
ET: Union Agriculture Minister Shivraj Singh Chouhan said on February 9 that sugar and ethanol have been kept out of the India-US trade deal. As talks move forward, will India be able to maintain its stance, or is there a possibility that the US might eventually push for increased market access for its sugar or ethanol?
DB: The government has clearly stated that ethanol is not part of the deal and farmers’ interests in ethanol will not be compromised. No concessions have been given on this front. Even in sugar, India is importing some quantities, so there is no issue. In fact, India has a surplus and exports sugar, while the US is a net importer. Exploring zero-tariff sugar exports to the US could be considered, but nothing beyond that.
There is absolutely no question of ethanol being included. India already has nearly 2,000 crore litres of ethanol capacity, with another 500 crore litres being added, while consumption is only about half of that. Given this surplus capacity and clear statements from senior ministers that ethanol and agriculture are excluded from the US deal, there is no confusion on the matter.
ET: What effects do you think the India-US trade deal will have on the country’s overall agricultural ecosystem?
DB: I don’t see any significant impact on the agricultural sector. Many stakeholders are waiting for the fine print of the agreement, which will bring greater clarity, but based on what has been released so far, there is little cause for concern. The government has shared only broad details, but nothing suggests any adverse implications for agriculture.
India is already importing certain agricultural products, such as pulses, and remains a net importer in these categories. At the same time, efforts toward self-reliance in pulses and oilseeds through dedicated missions will continue. In this context, allowing imports from the US under the trade deal does not change the current situation. Overall, I do not see any immediate or material impact on the agriculture ecosystem.
ET: Under the interim India-US trade framework, India has agreed to allow quota-based imports of US DDGS at concessional duty, amounting to about 5 lakh tonnes, roughly 1% of domestic consumption. How do you assess the likely impact of this move on domestic DDGS producers, feed costs, and the broader ethanol ecosystem?
DB: First, this is linked to grains, not sugar. Overall, the quantity involved is very small and insignificant, so it will not have any major impact.In the ethanol segment as well, it accounts for barely 1% of total animal feed consumption. Animal feed is protein-rich, and from what we have seen, the landed cost is almost the same as the domestic cost, offering no real price advantage. While it may have slightly higher protein content, it is typically blended for use. By contrast, our domestic DDGS has higher fat content, which makes it a better product overall.
ET: While the current arrangement is quota-based, some have voiced concern that the quota could expand in the future. From that point of view, could it disrupt market dynamics?
DB: That will not happen. The government has carefully evaluated the issue and taken a balanced approach. There is no major impact from this decision.
ET: The Economic Survey has highlighted the government’s push to expand maize cultivation to support the ethanol programme. However, there are concerns that the expansion could come at the cost of pulses and oilseeds, with implications for food security and import dependence. How do you view the role of maize in India’s ethanol ecosystem, and how can these trade-offs be managed?
DB: When the ethanol mission was launched in 2018, it was fundamentally anchored in sugarcane. At the time, the sugar industry was highly cyclical, and sugar alone was not a viable business due to weather-driven surpluses, delayed farmer payments, and financial stress. The ethanol roadmap aimed to add value to sugarcane and improve farmer incomes, making it the backbone of the blending programme.
Environmentally, too, sugarcane has a much lower carbon intensity than corn, making it one of the most sustainable ethanol feedstocks. For several years, it was central to the programme. In 2023-24, anticipating a weaker sugarcane crop while needing to meet blending targets, the government imposed partial restrictions on ethanol from sugarcane juice and B-heavy molasses. This reduced ethanol availability and led to a strong push for maize-based ethanol, supported by incentives of about Rs 6 per litre for oil marketing companies (OMCs).
These incentives sharply increased maize cultivation, aided by a higher minimum selling price (MSP). While the intent was to replace water-intensive rice, maize instead displaced pulses and oilseeds, both import-dependent crops, distorting the crop balance. Maize ethanol capacity expanded rapidly, creating imbalances that also affected the sugar economy. Although sugar production and capacity remain healthy, sugar-based ethanol allocations have fallen to about 28%, compared with industry expectations of around 50%, with the rest coming from maize and rice. The government now appears to be correcting the course. Recent allocations point to a more balanced approach, suggesting a gradual restoration of crop and feedstock balance as the ethanol ecosystem stabilises.
ET: How do you assess the impact of the Union Budget 2026-27 on the sugar and ethanol sectors?
DB: ISMA has been pressing for a hike in the minimum selling price of sugar, but prices have not moved so far. This is a systemic issue. While the fair and remunerative price (FRP) has been rising for six years, sugar prices have remained stagnant, with mills still selling below the cost of production.
Raising the sugar’s minimum selling price will not fuel inflation, even at Rs 39-40 per kg, since retail prices are tightly controlled and sugar has seen the least inflation among commodities. Despite this, no support price or minimum off-take price that covers production costs has been notified, which is unfortunate. The government may argue that this is outside the Budget, but as a Cabinet decision, it can still be taken. Encouragingly, the industry is receiving positive signals from the government.
ET: Are the current ethanol pricing and procurement policies or other modalities of OMCs adequate to encourage capacity expansion and long-term investment in the sugar and ethanol sectors? What changes, if any, are needed to make allocations or purchases or tenders floated by OMCs more investor-friendly?
DB: The modalities are very complex and need to be simplified, with a clear focus on the basic principle of feedstock selection. Sugarcane has been the backbone of the entire ethanol programme. Based on the roadmap brought out by NITI Aayog in 2018-19, the industry invested nearly Rs 40,000 crore to build capacity.
By 2025, when 20% blending is achieved, sugar-based ethanol is expected to account for about 55% of the mix. Capacity has already been created on that assumption, and the industry’s sole customer is the OMCs. These investments were made with the understanding that ethanol would be lifted by OMCs. If OMCs are now unable or unwilling to offtake this ethanol, the issue lies in the modalities, which need to be corrected to align policy with the capacity already created.
ET: What are the challenges that need to be addressed?
DB: Today, there is ample capacity in both grain and sugarcane, so the system should be simplified. A straightforward 50:50 allocation between sugarcane and grain is fair and practical.
With a total blending demand of around 1,150-1,200 crore litres for 20% blending, the current framework is unnecessarily complex, using parameters such as surplus and deficit states, distance norms, year-wise criteria, DEP, and LTOS. The allocation process has become difficult to understand. As a result, sugar-based ethanol has received only about 28% allocation, forcing many sugar mill distilleries to operate at barely 40% capacity, which is economically unviable. Instead, reserve 50% for sugar, around 550 crore litres annually, and allocate the balance, 500-600 crore litres, to grain. Distribute supplies based on actual offers. There is no need for such complexity when a simple, balanced approach works.
ET: Lastly, NITI Aayog has released several reports on net zero that are closely linked to biofuels. What are your views on these reports and their implications?
DB: Over the past two years, NITI Aayog has held extensive stakeholder consultations in line with India’s long-term goals of Viksit Bharat by 2047, Atmanirbhar Bharat, and achieving net zero by 2070. As part of this effort, it has released 11 sector-specific reports outlining pathways to net zero.
In its transport sector report, NITI Aayog clearly recognises that biofuels, especially bio-ethanol and CBG, are critical to achieving decarbonisation, along with grid-based electrification. The report offers strong recommendations on promoting these fuels. Notably, flex-fuel vehicles have been included for the first time under the zero-emission category, while CBG vehicles are placed alongside battery electric vehicles as clean mobility solutions. This reflects a lifecycle-based approach to decarbonisation rather than a narrow tailpipe-emissions view. The NITI Aayog CEO also underscored that India should avoid shifting from dependence on crude oil imports to dependence on critical mineral imports and that the pace and choice of mobility technologies must take this challenge into account.