India’s successful shift to E20 petrol forces a sharp reality check on sugar mills.
Plain sugar no longer promises strong returns, and industry leaders now eye CBG manufacturing as their next major leap.
Union Minister Nitin Gadkari has urged mills to move beyond traditional sugar production and focus on compressed biogas, ethanol, bio-manure and sustainable aviation fuel.
This diversification can protect mill profitability, raise farmer incomes and cut India’s massive fossil fuel import bill.
With clear government support and proven technology already available, sugar mills stand at a decisive turning point. CBG manufacturing offers them a practical path to long-term relevance and rural economic growth.
Gadkari stated clearly that the future of plain sugar remains mediocre at best. He told mills that only diversification into complementary by-products can guarantee a strong future.
The recent transition of the world’s third-largest car market to E20 petrol, which contains 20 percent ethanol, has already changed demand patterns. Mills that continue to rely mainly on sugar risk weaker margins and slower growth.
Key points Gadkari highlighted include:
Compressed bio-gas, or CBG, is a renewable gas produced from organic waste through anaerobic digestion. Feedstocks include agricultural residue, cattle dung, press mud, bagasse, rice straw, bamboo and Napier grass.
After purification and compression, CBG becomes chemically equivalent to natural gas and can power CNG vehicles as well as feed into the existing gas network.
Gadkari noted that technology already allows mills to convert these materials into CBG. The government has registered 1,908 CBG plants across the country, of which 132 already operate. India holds the potential to produce 50,000 tons of CBG every day, yet current output reaches only about two percent of that capacity.
The Cabinet has approved the GOBARdhan National Circular Bioenergy Scheme with an outlay of Rs 23,731 crore. The scheme will run from FY 2026-27 to FY 2035-36 and aims to increase domestic CBG production nearly ten-fold. The government has also introduced mandatory procurement obligations and fixed the procurement price at Rs 106 per kilogram.
These measures can inject Rs 2.5 lakh crore into the rural economy and create up to 15 lakh jobs. Mills that adopt CBG manufacturing can therefore strengthen their own balance sheets while supporting wider national goals of energy security and rural prosperity.
Gadkari stressed that mills must stop treating waste as a disposal problem. Converting bagasse, press mud and other residues into CBG reduces import dependence and creates new revenue streams.
The same logic applies to sustainable aviation fuel and bio-manure. Together, these products give sugar mills a diversified portfolio that matches India’s post-E20 energy landscape.
Sugar mills that act now on CBG manufacturing position themselves for the next leap in profitability and relevance. Those that delay risk remaining tied to a product whose future looks increasingly limited.
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