Bullish for Sugar Stocks: New Sugarcane Law to Boost Ethanol

The Indian government is drafting a new Sugarcane (Control) Order 2026, intended to replace the 1966 version. This updated framework aims to integrate ethanol production, introduce digital compliance, and formalize factory approvals, while retaining core elements like Fair and Remunerative Price (FRP) and payment deadlines.

This legislative overhaul is significant for the sugar industry as it formalizes and potentially incentivizes ethanol production, a key diversification strategy for sugar mills. It could lead to more stable revenue streams and better capacity utilization, aligning with India's biofuel targets.

Sugar companies with significant distillery capacities, such as Balrampur Chini Mills (BALRAMCHIN), EID Parry (EIDPARRY), Shree Renuka Sugars (RENUKA), and Dalmia Bharat Sugar (DALMIASUG), are likely to see a positive impact. The formalization of ethanol conversion could provide a clearer regulatory environment and potentially boost their profitability.

Traders should closely follow the finalization of the Sugarcane (Control) Order 2026 by May 20. Details on the conversion formula for ethanol and any specific incentives or regulations will be crucial for assessing the full impact on sugar stocks.

• •Centre proposing a new Sugarcane (Control) Order 2026, replacing the 1966 version.
• •Aims to integrate ethanol production, digital compliance, and factory approvals.
• •Introduces a conversion formula for ethanol and a formal approval process for new factories.
• •Risk flag: Unfavorable final draft provisions
• •Risk flag: Fluctuations in sugarcane production and pricing