Sugar stocks witnessed buying interest on June 11 after the central government announced a nil excise duty regime for petrol blended with higher levels of ethanol. The decision was notified by the Ministry of Finance through the Department of Revenue in the latest issue of The Gazette of India.

Under the notification, petrol containing ethanol blends ranging from 22% to 30% will be exempt from excise duty, subject to prescribed composition and quality standards. The measure is aimed at promoting higher ethanol blending and supporting India's long-term energy security and biofuel objectives.

Following the announcement, shares of several sugar companies moved higher in early trade. Dhampur Sugar Mills and Dwarikesh Sugar emerged among the top gainers, while Balrampur Chini, Bajaj Hindusthan Sugar, and Dalmia Bharat Sugar also traded in positive territory.

The notification specifies that 22% ethanol blended petrol must consist of 78% motor spirit and 22% ethanol by volume, with all applicable taxes having been paid on the ethanol component. The fuel must also conform to Bureau of Indian Standards specification IS 19850.

Similarly, 30% ethanol blended petrol must contain 70% motor spirit and 30% ethanol by volume while meeting the same tax compliance and quality standards. The government has laid out comparable requirements for intermediate blend levels covered under the exemption.

The policy is expected to encourage greater adoption of higher ethanol blends, potentially increasing demand for ethanol supplied by sugar manufacturers and distilleries. This could provide an additional revenue opportunity for integrated sugar companies that have expanded their ethanol production capacities in recent years.