Oil marketing companies issued a tender on October 16 for 11 billion litres of ethanol for the 2026-27 supply year. The plan excludes sugarcane juice and syrup to protect sugar stocks. Grain-based feedstocks now lead the supply mix, though officials must balance these needs with food security and poultry feed.
The country can pursue its ethanol-blending ambitions while creating new markets for farmers and building a more resilient domestic bioenergy economy
India's ethanol programme is entering a crucial phase as the country balances its energy-security ambitions with the need to maintain adequate sugar supplies. With lower sugar production expected in the 2026-27 season, the question is no longer simply how much ethanol India needs, but how reliably it can be produced without putting additional pressure on food and agricultural markets.
On October 16, oil marketing companies issued their procurement tender for the 2026-27 supply year, seeking around 11 billion litres of ethanol. The tender excluded ethanol produced from sugarcane juice, sugar syrup and B-heavy molasses, while retaining C-heavy molasses as an eligible feedstock. The procurement price for maize-based ethanol was also reduced from ₹71.86 to ₹68.86 per litre. These changes underline the growing importance of alternative feedstocks in maintaining ethanol supplies while prioritising domestic sugar availability.
Can grain bridge the gap?
Grain-based ethanol has already become a major part of India's supply mix. During the 2025-26 supply year, oil marketing companies received 987 crore litres of ethanol by September 2026, with grain-based feedstocks accounting for 71.4% of total receipts. Maize contributed 413 crore litres, surplus Food Corporation of India (FCI) rice 222 crore litres, and damaged food grains 70 crore litres.
This shift demonstrates the industry's ability to adapt. However, grain-based production cannot be expanded without considering competing demand. Maize is also essential to poultry feed, livestock and starch manufacturing, while rice allocation must account for food-security requirements.
The challenge is, therefore, to determine how much additional grain can be supplied at commercially viable prices. The recent reduction in maize ethanol procurement prices makes this calculation particularly important. Higher feedstock costs, transportation and processing expenses can affect plant utilisation and investment decisions. Reliable ethanol supplies require a balance between procurement economics, agricultural availability and policy objectives.
Creating value beyond conventional feedstocks
Grain can help bridge the immediate supply gap, but a more resilient ethanol ecosystem will require a broader feedstock strategy. Surplus rice and damaged food grains can contribute when available and permitted, subject to food-security priorities. Over the longer term, agricultural residues such as rice straw and wheat straw, alongside suitable organic waste, could support advanced biofuel production.
These alternatives are not immediate substitutes for conventional ethanol. They require investment in processing technology, collection infrastructure, transportation and dependable supply arrangements. Their existing uses, including animal fodder and soil enrichment, must also be considered.
Nevertheless, they offer an opportunity to create value from underutilised agricultural resources. Village-level collection centres, storage facilities, biomass aggregation businesses and transport services can generate rural employment and additional income opportunities for farmers and local entrepreneurs.
Farmer-producer organisations can help aggregate raw materials and connect small producers with industrial buyers. For these models to succeed, farmers must receive fair compensation, and buyers must have sufficient certainty over quality, availability and pricing to justify long-term investment.
Planning for a more resilient ethanol sector
India's immediate priority is to maintain reliable ethanol supplies without compromising sugar availability or creating excessive competition for food and feed grains. This requires better coordination between agricultural production estimates, procurement planning and regional supply chains.
Predictable policy frameworks, commercially viable procurement prices and investment in advanced biofuel technologies can help the industry adapt. Over time, a wider mix of grain-based and residue-based feedstocks can reduce dependence on any single agricultural commodity.
The current transition should be viewed as an opportunity to strengthen the relationship between agriculture and energy. Grain-based ethanol can play a significant role in bridging the immediate gap, while agricultural residues and organic waste offer longer-term opportunities for diversification.
With sound planning, viable economics and stronger rural supply chains, India can pursue its ethanol-blending ambitions while creating new markets for farmers and building a more resilient domestic bioenergy economy.
The author is Chairman & Managing Director, JK India eAgriTech Ltd.