India Excludes Sugar-Based Ethanol from 2026-27 Tender
State-run oil companies have prohibited sugar-derived ethanol in their latest procurement tender to safeguard domestic sugar supplies.
The 2026-27 ethanol tender excludes sugarcane juice and syrup-based ethanol.
Maize-based ethanol incentives have been reduced from ₹71.86 to ₹68.86 per litre.
The decision aims to balance energy needs with domestic sugar availability amid rising prices.
In a significant policy shift, India has barred the inclusion of ethanol derived from sugarcane juice, sugar syrup, and B-heavy molasses in its latest procurement tender for the 2026-27 supply year. This decision, announced by Bharat Petroleum Corporation Limited (BPCL) on October 16, aims to protect domestic sugar supplies while supporting the country's petrol-blending program, which mandates a 20% ethanol blend in petrol.
The tender seeks bids for approximately 11 billion litres of ethanol, set to begin supply in November. The government's directive to eliminate sugar diversion for ethanol production reflects growing concerns over domestic sugar availability and rising prices, particularly following inadequate rainfall in major sugar-producing states such as Maharashtra and Karnataka. The tender document explicitly states that no offers will be accepted for sugarcane-derived ethanol in this procurement cycle.
Additionally, the tender has reduced the incentive for maize-based ethanol, decreasing the procurement price from ₹71.86 to ₹68.86 per litre. This reduction is expected to impact returns for producers of maize-derived ethanol, emphasizing the need for alternative raw materials as sugar-based feedstocks are excluded. The tender now allows bids for ethanol sourced from maize, broken rice, surplus rice from the Food Corporation of India (FCI), and C-heavy molasses.
This strategic move highlights the Indian government's efforts to balance its energy security goals with the necessity of maintaining sufficient sugar supplies for food consumption. As the world's largest sugar consumer, India has increasingly relied on ethanol blending to decrease its dependence on imported crude oil. However, using sugarcane and sugar for fuel production can lead to competition with food supplies, especially when production is limited.
Looking ahead, the exclusion of sugar-based ethanol in the 2026-27 procurement cycle is likely to elevate the significance of grain-based ethanol production. Factors such as feedstock availability, procurement prices, and distillery capacity will become crucial in fulfilling blending requirements. The procurement tender covers the ethanol supply year from November 2026 to October 2027, marking a pivotal moment in India's energy and agricultural policy landscape.
