Sugar stocks fell up to 6% in early trade on October 19 after the government directed oil marketing companies to reduce sugar diversion for ethanol production to zero for the 2026/27 supply year.
The latest ethanol tender excludes supplies produced from sugarcane juice, sugar syrup and B-heavy molasses, a sugar-rich by-product of cane crushing.
Balrampur Chini Mills, EID Parry, Triveni Engineering and Industries, Bajaj Hindusthan Sugar, Shree Renuka and Dhampur Sugar fell between 2% and 6% in morning trade.
The decision limits companies' ability to shift cane and molasses between sugar and ethanol depending on market conditions, potentially weakening margins and reducing the return on ethanol-capacity investments.
The move is aimed at increasing domestic sugar availability and easing record high prices in India, the world's biggest sugar consumer.