India's Ethanol Blending Program Curbs Sugar Exports, Reshaping Global Market

India's ambitious ethanol blending program is increasingly influencing the availability of sugar for export, a trend that is expected to continue into the 2026/27 marketing year. The government's push to achieve a 20% ethanol blend in gasoline by 2025 has led to a significant diversion of sugarcane juice and B-heavy molasses towards ethanol production. While this initiative supports energy security and reduces carbon emissions, it inherently limits the raw material available for sugar manufacturing. Indian sugar mills are incentivized to prioritize ethanol, given stable procurement prices and a clear government mandate. This policy has transformed India from a sporadic large exporter to a more consistent, albeit smaller, player in the global sugar trade. Analysts at HiSugar project that India's sugar exports will remain constrained as long as the ethanol program maintains its momentum. The domestic sugar balance is carefully managed to ensure sufficient supply for local consumption before any surplus is considered for export. This strategic shift by India, a country known for its potential to swing global sugar markets, means that other major exporters will increasingly fill the void, making their crop conditions and export policies even more critical for global price discovery. The long-term implications for global sugar trade patterns are significant.