Indian sugar stocks rose this week after the government waived excise duty on petrol blended with 22% to 30% ethanol [3].
The move is designed to stimulate demand for ethanol and improve the financial outlook for the sugar industry. By lowering the tax burden on higher ethanol blends, the government aims to accelerate the adoption of biofuels in the national petrol market.
Market reactions were immediate following the policy announcement. Shares of several major sugar companies saw gains, including Dhampur Sugar, Dwarikesh Sugar, Balrampur Chini, Bajaj Hindusthan Sugar, and Dalmia Bharat [1].
Reports on the magnitude of the stock surge vary. Some data indicates that sugar stocks rose up to 3.5% [1], while other reports state the increase reached 2.5% [2]. The fluctuation reflects the immediate market response to the fiscal change announced on June 10, 2024.
The excise duty waiver specifically targets petrol with ethanol blends between 22% and 30% [3]. This targeted tax relief is intended to make high-blend fuels more competitive against traditional petrol, thereby creating a more consistent revenue stream for sugar mills that produce ethanol as a byproduct.
Industry analysts said that the shift toward higher ethanol blending is a strategic move to reduce reliance on imported crude oil. This policy supports the broader goal of increasing the share of renewable energy in the transport sector while providing a price floor for sugarcane producers.
“Indian sugar stocks rose this week after the government waived excise duty on petrol blended with 22% to 30% ethanol.”
This policy shift signals India's commitment to diversifying its energy mix and reducing its trade deficit by lowering fuel imports. By incentivizing the use of 22% to 30% ethanol blends, the government is effectively linking agricultural productivity with energy security, providing sugar companies with a diversified income stream that reduces their vulnerability to volatile global sugar prices.
