Sugar stocks rallied sharply on Thursday after the Finance Ministry notified a cut in excise duty on ethanol-blended petrol, boosting optimism surrounding India's ethanol blending programme.Shares of Dwarikesh Sugar, Dhampur Sugar, Mawana Sugars, Balrampur Chini, and Dalmia Bharat Sugar rose 3–4%, as investors cheered the policy move that is expected to support ethanol demand and improve earnings visibility for sugar manufacturers.According to a Times of India report, India has waived excise duty on multiple ethanol-blended petrol variants, including E22, E25, E27 and E30, as part of its broader strategy to accelerate the adoption of cleaner fuels.The exempted blends include E22 (78% petrol and 22% ethanol), E25 (75% petrol and 25% ethanol), E27 (73% petrol and 27% ethanol), and E30 (70% petrol and 30% ethanol), reflecting the government's push towards higher ethanol blending in transport fuels.The move aligns with the government's ambitious ethanol roadmap, which includes launching 50–100 ethanol fuel stations across Delhi-NCR, Mumbai, Pune and Nagpur before expanding the network to 500 outlets by the end of 2026.The announcement comes at a time when global energy markets remain under pressure due to the ongoing Middle East conflict. Crude oil prices have climbed from around $70 per barrel to above $100, leading to a cumulative increase of over Rs 7.5 per litre in domestic petrol and diesel prices.The Finance Ministry had earlier indicated that state-run oil marketing companies are preparing to offer E85 fuel at a discount of Rs 20 per litre compared with E20 petrol. The discount aims to offset ethanol's lower energy content and encourage consumer adoption.While E85 contains 85% ethanol and 15% petrol, E20 petrol—already compatible with most vehicles on Indian roads—will continue to be available nationwide.Also read: Exclusive | Why BSE wants options traders to think beyond the next expiryFor sugar companies, the excise relief is being viewed as a significant positive. A faster shift towards ethanol blending could create a sustained demand avenue beyond traditional sugar sales, giving the sector another reason to celebrate.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)