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Bengaluru: Growing demand for ethanol as an alternative fuel has triggered a fresh race to establish sugar mills in Karnataka, with 42 applications reportedly submitted to the Sugar Commissionerate seeking permission to set up new factories across the state.
Most of the applications are from the Kittur Karnataka and Kalyana Karnataka regions, where sugarcane cultivation and the sugar industry have a strong presence. Belagavi tops the list with 13 applications, followed by Vijayapura with eight, Kalaburagi with six, and Bagalkot and Dharwad with four each.
The surge in applications comes at a time when the Union government is encouraging ethanol blending in petrol as part of efforts to reduce dependence on fossil fuels and diversify the country’s energy sources. The growing market for ethanol has made sugar mills more attractive to investors, as sugarcane can be used not only for sugar production but also for ethanol manufacturing.
The development has assumed political significance in Karnataka, particularly in the Kittur Karnataka region. Several prominent political leaders from the region are associated with the sugar industry, and many of those seeking permission for new mills are reportedly influential political figures or entities linked to them.
According to data from the Sugar Commissionerate, sugarcane is cultivated across around 7.5 lakh hectares in Karnataka. The state crushes approximately 576 lakh metric tonnes of sugarcane annually and produces nearly 49 lakh metric tonnes of sugar.
Karnataka currently has 81 operational sugar factories, including units in the cooperative sector. Belagavi alone accounts for 29 sugar mills, making it the state’s largest sugar-producing hub.
If all 42 applications receive approval and the proposed factories become operational, the number of sugar mills in Karnataka would rise from 81 to 123.
The sharp increase in applications has also raised questions over whether the state has sufficient sugarcane availability to support such a large expansion in crushing capacity. Sugar mills depend heavily on a steady supply of cane from farmers within their command areas, and excessive competition among factories could potentially affect cane procurement and mill viability.
At the same time, the ethanol opportunity is expected to remain a major factor driving investment in the sector. Sugar factories can diversify their revenue by producing ethanol from molasses and other sugar-industry by-products, thereby reducing their dependence on sugar prices.
The proposed expansion could also create employment opportunities and boost ancillary activities in rural areas, including transportation, equipment supply and other services associated with sugar mills. However, experts and policymakers will have to examine factors such as water availability, sugarcane acreage, environmental impact, distance between existing and proposed factories and the financial viability of each project before granting approvals.
The concentration of applications in Belagavi, Vijayapura, Kalaburagi, Bagalkot and Dharwad indicates that investors continue to view northern Karnataka as the principal growth centre for the sugar industry.
The government is now expected to scrutinise the applications before taking a decision on granting permissions. The proposed projects, if cleared, could significantly alter the state’s sugar and ethanol production landscape.
The development comes against the backdrop of Karnataka already having one of the country’s largest sugar industries. With ethanol emerging as an increasingly important component of the country’s fuel strategy, the proposed investments indicate that sugar mills are increasingly being viewed not merely as sugar-producing units but as integrated biofuel and agro-processing enterprises.
This post was last modified on September 5, 2026 11:15 am