India Holds Ethanol Blending at 20% as Sugar Output Falls and Prices Rise
Key Facts
Ethanol blending in petrol in India reached 20% from November to June in the 2025-26 supply year, according to data from the Ministry of Petroleum and Natural Gas published by the Press Information Bureau. The figure is in line with the government’s target for the year, after an average of about 19.2% in 2024-25. But sugar data and prices put the program at a renewed trade-off between securing feedstock for biofuel and meeting food demand. The Indian Council for Research on International Economic Relations linked weak sugar output and lower stocks to higher prices, while the government’s estimate for the season’s output was cut from its initial estimate. Available information contains no government announcement that the blending target has been lowered or changed to 15%.
The government set a blending target of 20% for the 2025-26 supply year, which runs from November to June, according to a statement from the Ministry of Petroleum. Published data show average blending was about 19.2% in 2024-25 before reaching 20% during the recorded period of the following year. The ministry said India achieved the 20% level five years ahead of the original schedule. This marks progress in implementing a program that links fuel policy to reducing reliance on imported oil. The government said in July that no decision had been taken to raise blending above 20%, and that any future move to higher rates would follow technical and scientific studies and consultations with stakeholders.
India’s ethanol supplies rely in part on crops also used for food and animal feed; the Associated Press said about 70% of ethanol comes from sugarcane, corn and rice. That reliance means the availability and prices of agricultural commodities are directly linked to producers’ ability to supply ethanol, while the crops are also used in other markets. Government data, meanwhile, showed the share of sugar diverted to ethanol fell from about 12% in 2022-23 to about 9% in 2025-26. The government said nearly three-quarters of domestically produced ethanol now comes from grains, particularly corn. These figures offer a picture of the diversification of supply sources and the decline in sugar’s share of fuel production compared with the earlier period.
In the sugar market, a research paper by the Indian Council for Research on International Economic Relations linked lower stocks and weak production to a 44% increase in the median retail price, from 45 rupees per kilogram in July to 65 rupees by August 29, 2026. The price trend points to higher costs for consumers during the period covered by the paper. The government also estimated sugar production in the 2025-26 season at about 306 lakh metric tons, compared with an initial estimate of about 343 lakh metric tons. The Ministry of Consumer Affairs, Food and Public Distribution attributed the lower estimate to red rot and top borer diseases, as well as waterlogging caused by excess rain. These figures link changes in agricultural estimates with price movements, as crops remain an input for ethanol production.
In a broader agricultural context, Agriculture Ministry data showed sugarcane production in Maharashtra was 1,099.70 lakh tons in 2024-25, rising to 1,316.49 lakh tons in the third advanced estimate for 2025-26. This provides an official picture of increased production in the state between the two periods, without determining on its own the size of the next crop or the impact of weather conditions. On supply, the government allowed imports of up to 10 lakh metric tons of raw sugar duty-free to increase domestic availability. The ministry said it would continue to monitor stocks, prices and market practices. The import measure adds supply to the government’s tools for managing the sugar market, alongside the lower seasonal production estimate and the rise in the median retail price.
The government also links the blending program to external energy savings: it said the program saved more than 1.97 trillion rupees in foreign exchange and replaced about 316 lakh metric tons of crude oil, according to cumulative data published in July 2026. The Associated Press also cited the Institute for Energy Economics and Financial Analysis as saying that 20% ethanol blending cut India’s crude oil imports by 2.5% in 2025. These estimates illustrate one aspect of the program’s effect on reliance on imported crude, alongside its dependence on agricultural resources. The Indian Council for Research on International Economic Relations paper called for a more adaptive approach to blending policy in response to agricultural and market conditions; this is a research recommendation, not an announced policy change. On raising the rate above 20%, the government said in July that any decision would follow studies and consultations.