Maharashtra's sugar industry is facing a fresh financial setback after the Centre's latest policy decision effectively stopped oil marketing companies from procuring ethanol produced from sugarcane juice, syrup and B-heavy molasses for the current year, Hindustan Times reported, in a report carried by ChiniMandi. The move threatens to deprive the state's sugar mills of an estimated Rs 7,000 crore in revenue — yaani Rs 70 billion — adding to their difficulties amid expectations of lower sugar production this season and raising concerns over timely payments to sugarcane farmers.

The Centre's direction, which takes effect from the new ethanol supply year starting November 1, was confirmed independently in IANS reporting: five public-sector refiners — Indian Oil, Bharat Petroleum, Hindustan Petroleum, Numaligarh Refinery and Mangalore Refinery — have issued a joint tender seeking nearly 11 billion litres of ethanol, and the tender document states that no offers have been sought for ethanol produced from sugarcane juice, sugar, sugar syrup and B-heavy molasses. Suppliers can still offer ethanol made from C-heavy molasses, damaged food grains, surplus FCI rice, corn and other permitted feedstocks. The government has said the step is aimed at increasing domestic sugar availability and containing price increases, after a weak monsoon hit sugarcane output.

According to estimates presented to Chief Minister Devendra Fadnavis for the 2026-27 sugar season, Maharashtra is expected to have around 99 million tonnes of sugarcane available for crushing. Sugar production was projected at 9.6 million tonnes after diverting 1.5 million tonnes of sugar towards ethanol production, but early commencement of crushing and lower cane yields are now expected to reduce the state's sugar production by around 1.8 million tonnes.

Against this backdrop, sugar mills have sought financial assistance for drought-hit farmers and factories, an increase in the minimum selling price (MSP) of sugar from the existing Rs 31 per kg to Rs 45 per kg, assistance of Rs 1,000 per tonne for sugarcane farmers and Rs 500 per tonne for sugar mills, the Hindustan Times report said.