India sugar stocks slide as government halts sugarcane-based ethanol diversion

India's sugar stocks have declined as the government has stopped oil marketing companies from diverting sugarcane-based ethanol for 2026/27. This move is expected to increase the availability of sugar for domestic consumption, potentially leading to higher prices and increased demand for the commodity. The decision could also impact the profitability of sugar mills, as they may struggle to sell their ethanol production. As a result, shares of major sugar companies have fallen, with some declining by as much as 6%.

Why it matters

The government's halt on sugarcane-based ethanol diversion is affecting sugar stocks. This move is likely to reduce demand for sugarcane, impacting the sugar industry's profitability.

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