New Delhi also plans to raise the price at which oil
companies buy ethanol from sugar mills as part of efforts to boost supplies of
the biofuel. They did not wish to be identified as deliberations were not
public.
India's absence from the world market would further squeeze
global supplies, propping up benchmark prices in New York and London.
New
Delhi plans to prohibit mills from exporting sugar when supplies from Brazil,
the world's top producer and supplier of the sweetener, are expected to drop
because of a drought in the South American nation.
"In the current crop scenario, there is no space for
sugar exports," said one of the government sources.
"After fulfilling the local sugar demand, our next
priority is ethanol blending, and we need much more cane to meet the ethanol blending
targets."
Seeking to curb carbon emissions, India aims to increase the
share of ethanol in gasoline to 20% by 2025-26, from around 14% now.
Some of the Indian sugar mills have increased their ethanol
production capacity in the last few years.
The government is also considering an increase in ethanol
procurement price by more than 5% for the new marketing season beginning
November, sources said.
Late
last month, a government order said India would allow sugar mills to
use cane juice or syrup to produce ethanol starting in November.
India, also the world's biggest sugar producer after Brazil,
banned mills from exporting the sweetener during the current season that began
on October 01, 2023. That was the first sugar export curb time in seven years.
New Delhi allowed mills to export only 6.1 million metric
tons of sugar during the last season, nearly half of the country's total
shipment in 2021-22.
Sugar
output during the next 2024-25 season is likely to fall to 32 million metric
tons from this year's 34 million tons due to the adverse impact of last year's
patchy rains in Maharashtra and Karnataka states, the sources said.
"The world will need shipments from India in 2025, as
Brazil's production is expected to be lower. Without Indian exports, global
prices will rise further," said a Mumbai-based dealer with a global trade
house.
