Publish Date: Sun, 18 Oct 2026 (14:52 IST)
Updated Date: Sun, 18 Oct 2026 (14:53 IST)
India has excluded ethanol produced from sugarcane juice, sugar syrup and B-heavy molasses from its latest procurement tender for the 2026-27 supply year, as the government seeks to protect domestic sugar supplies while continuing its petrol-blending programme.
The tender, issued by Bharat Petroleum Corporation Ltd (BPCL) on October 16 on behalf of state-run oil marketing companies (OMCs), invites bids for approximately 11 billion litres of ethanol for the supply year beginning in November 2026. The procurement is aimed at meeting the country's requirement for blending 20% ethanol with petrol.
The tender has also reduced the procurement price for maize-based ethanol to ₹68.86 per litre from ₹71.86 per litre, cutting the incentive available to producers using maize as a feedstock.
"The Government of India has issued directions that sugar diversion for ethanol be reduced to zero for ethanol supply year 2026-27," the tender document stated.
It further clarified, "No offers have been sought for ethanol produced from sugarcane juice, sugar or sugar syrup and B-heavy molasses in this quantity bid tender."
Maize, Rice and C-Heavy Molasses Remain Eligible
Under the latest procurement terms, oil marketing companies will accept bids for ethanol produced from maize, broken rice, surplus rice procured by the Food Corporation of India (FCI) and C-heavy molasses.
The exclusion of sugar-based feedstocks represents a significant shift in raw material sourcing for India's ethanol-blended petrol programme, which has relied on both grain-based and sugarcane-based ethanol to reduce crude oil imports and vehicle emissions.
The reduction in the maize-based ethanol procurement price from ₹71.86 to ₹68.86 per litre lowers the rate by ₹3 per litre. It could affect the returns of producers supplying ethanol made from maize, even as the restrictions increase the importance of alternative feedstocks.
Concerns Over Domestic Sugar Supplies
The government's decision comes amid concerns about domestic sugar availability and rising prices. Poor rainfall in major sugar-producing states, including Maharashtra and Karnataka, has raised concerns about a possible decline in sugar output.
India is the world's largest sugar consumer, and the availability of sugar for domestic consumption remains an important consideration when determining how much sugarcane can be diverted towards fuel production.
Using sugarcane and sugar for ethanol can create competition between fuel requirements and food supplies, particularly when production is under pressure. Restricting sugar-based ethanol is intended to help maintain domestic availability while supporting the country's energy objectives.
India Continues Its 20% Ethanol Blending Programme
India has adopted petrol containing up to 20% ethanol, known as E20, as part of its efforts to reduce dependence on imported crude oil and lower emissions.
Ethanol is produced from agricultural feedstocks such as sugarcane and grains and blended with petrol to replace a portion of conventional fossil fuel consumption. The programme has also created a significant market for domestic distilleries and provided farmers with an additional source of demand for agricultural produce.
However, maintaining the blending programme requires a steady supply of suitable raw materials, sufficient production capacity and procurement prices that support ethanol manufacturers.
The exclusion of sugar-based ethanol from the 2026-27 tender is expected to increase the importance of grain-based production, particularly ethanol derived from maize and rice.
The procurement cycle will cover the period from November 2026 to October 2027. During this period, feedstock availability, pricing and distillery capacity will be crucial to meeting the government's ethanol-blending requirements while balancing energy security with domestic sugar demand.
