Sugar stocks surged in morning trade on September 2 after the government decided to remove limits on ethanol production from sugarcane juice, sugar syrup, and molasses for the year 2025-26.

The government had restricted production of ethanol from sugarcane juice, syrup and all types of molasses in the current marketing year amid a drop in sugarcane supplies. In the new ethanol supply year starting from November 1, sugar mills and distilleries will be allowed to produce ethanol without any quantitative restriction, the Ministry of Consumer Affairs, Food & Public Distribution said.

The Department of Food and Public Distribution (DFPD) will periodically review the sugar diversion to ethanol to ensure year-round domestic availability of the sweetener, it said. This comes as sugarcane supplies are expected to jump in the new season as ample monsoon rains for two straight years have helped farmers expand area under the crop.

Balrampur Chini Mills shares jumped more than 7 percent to trade at Rs 580 apiece, while Shree Renuka Sugars shares rallied over 15 percent to trade at Rs 33 apiece. Bajaj Hindusthan Sugar and Godavari Biorefineries shares gained 12 percent and 5 percent respectively.

Uttam Sugar Mills shares rallied over 9 percent, while Dhampur Sugar Mills and Magadh Sugar & Energy shares were trading around 10 percent higher. Triveni Engineering shares were up 4.5 percent, while Dwarikesh Sugar and other stocks gained up to 14 percent.

Smallcap stock Rajshree Sugars & Chemicals meanwhile surged 20 percent to hit the upper circuit at Rs 45.26 apiece.

Earlier yesterday, the Supreme Court dismissed a plea which challenged the nationwide rollout of 20 percent Ethanol Blended Petrol (EBP-20).

The petitioner had alleged that vehicles manufactured in India prior to April 2023 are not compatible with ethanol mix petrol. Vehicles as new as 2 years old are also not compatible with ethanol mixed petrol wherein the percentage of ethanol is 20 percent, despite the cars being BS-VI compliant, the person added.

The plea, filed by advocate Akshay Malhotra, had sought a direction to the Ministry of Petroleum and Natural Gas to ensure availability of ethanol-free petrol at all fuel stations. A bench headed by Chief Justice of India BR Gavai, along with Justice K Vinod Chandran, dismissed the plea. Attorney General R Venkataramani, opposing the petition, said that the matter had already been thoroughly examined before the policy’s rollout. He alleged that the petitioner was merely a “front” for a larger lobby and stressed that the policy benefits sugarcane farmers while also conserving foreign exchange. “Should people outside the country decide what fuel India should use?” the AG remarked.