Sugar Stocks Rally Following Excise Duty Exemption On Higher Ethanol Blends

June 12 saw stocks of sugar stocks moving up following the Centre’s announcement of an excise duty exemption for petrol blends containing ethanol at a concentration of more than 20%.

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Dhampur Sugar Mills and Dwarikesh Sugar were among the top gainers in the sector during morning trade, rising as much as 3.5% and 2.7%, respectively. Shares of Balrampur Chini Mills, Bajaj Hindusthan Sugar and Dalmia Bharat Sugar also moved higher, gaining between 1.5% and 2%.

The rally followed a government notification exempting higher ethanol-blended petrol variants from excise duty. The relief applies to fuel grades containing ethanol in the range of 22% to 30%.

New Ethanol Fuel Categories Covered

Under the notification, petrol variants designated as E22, E25, E27 and E30 will qualify for the exemption. These fuel grades contain ethanol proportions of 22%, 25%, 27% and 30%, respectively, with the remaining portion comprising petrol.

The exemption applies to motor spirit on which the applicable excise duty has already been paid and to ethanol for which the relevant Goods and Services Tax (GST) liability has been discharged.

The latest measure follows the introduction of technical standards for ethanol-petrol blends above E20. The government had announced in December that India achieved its target of 20% ethanol blending in petrol ahead of schedule.

Separate notifications have also provided relief from additional excise duty as well as road and infrastructure cess for these higher ethanol fuel variants.

Push For Alternative Fuels

The policy move comes after the Ministry of Road Transport and Highways proposed amendments to the Central Motor Vehicles Rules in April to facilitate the use of fuels such as E85, E100, biodiesel and hydrogen-blended alternatives.

E85 consists of 85% ethanol blended with petrol, while E100 is ethanol-based fuel intended for flex-fuel vehicles capable of operating on higher ethanol concentrations.

The government has been encouraging the adoption of alternative fuels to reduce dependence on imported crude oil and expand the use of domestically produced biofuels.

Sector Watches Demand Outlook

The latest exemption is expected to support the economics of higher ethanol blending and could improve utilisation levels at ethanol manufacturing facilities operated by sugar companies.

The development also comes at a time when global energy markets remain sensitive to supply concerns linked to tensions in West Asia. The Strait of Hormuz, a critical route for global oil shipments, handles nearly one-fifth of the world’s oil supplies.

With policy support continuing for ethanol blending and alternative fuel adoption, sugar companies with ethanol production capacity remain in focus as the sector evaluates the long-term impact of the government’s latest decision.