Key facts
- India has exempted multiple ethanol-blended petrol variants, including E22, E25, E27, and E30, from excise duty.
- The move is expected to boost demand for ethanol and improve earnings visibility for sugar manufacturers.
- Shares of Dwarikesh Sugar, Dhampur Sugar, Mawana Sugars, Balrampur Chini, and Dalmia Bharat Sugar saw gains of 3-4%.
- This policy change supports India's broader strategy to accelerate the adoption of cleaner fuels and its ethanol roadmap.
Indian sugar stocks experienced a significant rally on Thursday following the Finance Ministry's decision to exempt several ethanol-blended petrol variants from excise duty. This move is anticipated to bolster India's ethanol blending program, thereby increasing demand for ethanol and enhancing the earnings outlook for sugar manufacturers.
The exempted petrol variants include E22, E25, E27, and E30, reflecting the government's commitment to promoting cleaner fuels and its ambitious ethanol roadmap. This initiative includes plans to establish 50-100 ethanol fuel stations in select cities before expanding to 500 outlets by the end of 2026.
The announcement comes amid rising global energy prices, with crude oil climbing above $100 per barrel, leading to substantial increases in domestic petrol and diesel prices. State-run oil marketing companies are also preparing to offer E85 fuel at a discount to encourage consumer adoption.
For sugar companies, this excise relief is seen as a substantial positive, potentially creating a sustained demand channel beyond traditional sugar sales and contributing to the sector's long-term growth.