Uttar Pradesh has emerged as India’s leading ethanol-producing state after implementing its Sugar Industry, Co-generation and Distillery Promotion Policy, which has encouraged sugar mills to diversify into ethanol production and renewable power generation while improving returns to farmers, The Times of India reported.
Introduced as part of the state’s industrial development strategy, the policy aims to modernise sugar mills, expand ethanol distillation capacity, promote bagasse-based co-generation and attract private investment. It also supports the Centre’s Ethanol Blended Petrol (EBP) programme by increasing the supply of ethanol from both sugarcane and grain-based feedstocks.
The policy offers capital subsidies for new and expanded distilleries, financial assistance for bagasse-based co-generation projects, stamp duty concessions, interest subsidies and faster project approvals through a single-window clearance system.
According to the state government, Uttar Pradesh’s annual ethanol production capacity has increased from about 42 crore litres in 2017 to more than 175 crore litres in 2025-26. More than 40 sugar mills have either established ethanol distilleries or integrated ethanol production facilities.
Bagasse-based co-generation capacity has also exceeded 1,000 MW, enabling sugar mills to supply surplus electricity to the state grid while reducing dependence on conventional power sources.
The government said diversification into ethanol has strengthened the financial position of sugar mills by reducing their dependence on sugar prices and creating an additional revenue stream. This has also helped mills improve the timely payment of cane dues to farmers.
Several leading sugar companies, including Balrampur Chini Mills, Dhampur Sugar Mills, Triveni Engineering & Industries, DSCL Sugar, Bajaj Hindusthan Sugar and Dwarikesh Sugar Industries, have expanded their ethanol production capacity and renewable energy projects under the policy.
The government said the initiative has increased demand for sugarcane, reduced sugar stock accumulation, improved liquidity in the sugar industry and provided greater income stability for farmers.
By integrating sugar production with ethanol manufacturing and renewable power generation, Uttar Pradesh has strengthened its sugar economy while contributing significantly to India’s ethanol blending targets and clean energy transition.
