Indian Sugar Stocks Tumble as Government Halts Ethanol Diversion for 2026/27
Indian sugar stocks drop up to 6% as the government mandates a zero-diversion policy for ethanol production to stabilize domestic sugar prices and supply.
POLICY WIRE — New Delhi, India — Shares of major Indian sugar producers experienced a sharp decline during early trading on Monday, October 19, 2026, following a government mandate to halt the diversion of sugar for ethanol production.
The directive, which instructs oil marketing companies to reduce sugar diversion to zero for the 2026/27 supply year, triggered a sell-off across the sector. Investors reacted to the news as companies face new constraints on their feedstock flexibility.
Market data showed significant losses for industry leaders, with stocks for Balrampur Chini Mills, EID Parry, Triveni Engineering, Bajaj Hindusthan Sugar, Shree Renuka, and Dhampur Sugar falling between 2% and 6% in morning trade.
The government’s decision to exclude sugarcane-based feedstocks from the latest ethanol procurement tender is aimed at bolstering domestic sugar availability. Officials implemented the policy to address concerns regarding anticipated lower sugar outputs and to mitigate rising domestic prices.
This sudden policy shift has raised concerns among analysts regarding the potential impact on profit margins and the future of investments in ethanol capacity. The move marks a significant pivot in the government’s strategy to manage inflation and ensure sufficient sugar supplies for the upcoming year.
Reporting by Policy-Wire (PW)
