State-owned oil marketing companies barred ethanol made from sugarcane juice, sugar syrup, and B-heavy molasses for the 2026-27 supply year. The government said, “The Government of India has issued directions that sugar diversion for ethanol be reduced to zero.” This move protects domestic sugar supplies while keeping petrol-blending targets intact.
New Delhi: State-owned oil marketing companies (OMCs) have barred ethanol made from sugarcane juice, sugar syrup and B-heavy molasses from their latest procurement tender for the 2026-27 supply year for blending in petrol, as the government has sought to protect domestic sugar supplies while sustaining its nationwide petrol-blending programme.
The move of the oil-marketing firms comes amid concerns over domestic sugar availability and rising prices after poor rainfall in key sugar-producing states, including Maharashtra and Karnataka, raised the risk of lower output.
Bharat Petroleum Corporation Ltd (BPCL) on behalf of OMCs last week floated a tender, seeking bids for around 11 billion litres of ethanol for the supply year beginning November to meet the requirement of doping 20 per cent ethanol in petrol. It also cuts the incentive for maize-based ethanol, lowering the procurement price to Rs 68.86 per litre from Rs 71.86.
“The Government of India has issued directions that sugar diversion for ethanol be reduced to zero for ethanol supply year 2026-27. No offers have been sought for ethanol produced from sugarcane juice, sugar or sugar syrup and B-heavy molasses in this quantity bid tender,” the tender document said.
The restrictions mark a shift in feedstock sourcing for the ethanol-blended petrol programme, which has relied on both grain-based and sugarcane-based ethanol to reduce crude oil imports and cut vehicle emissions. The tender allows bids for ethanol produced from maize, broken rice, surplus rice procured by the Food Corporation of India (FCI) and C-heavy molasses, according to the document.
It is, however, expected that the reduction in the maize incentive to come Rs 2.79 per litre from Rs 5.79 to lower returns for producers supplying ethanol from the grain, even as the exclusion of sugar-based feedstocks increases the importance of alternative raw materials.
India, the world's largest sugar consumer, has increasingly used ethanol blending to reduce its dependence on imported crude oil. However, diverting sugarcane and sugar for fuel production can compete with supplies available for food consumption, particularly when output is constrained. So, the latest tender underscores the government's effort to balance its energy-security objectives with the need to maintain adequate sugar supplies and contain domestic prices.