The Indian government has decided to exclude ethanol derived from sugarcane juice, sugar syrup, and B-heavy molasses from its latest procurement tender for the 2026-27 supply year. This decision aims to safeguard domestic sugar supplies while continuing the nationwide petrol-blending initiative. The tender, released on October 16 by Bharat Petroleum Corporation Ltd (BPCL) on behalf of state-run oil marketing companies, seeks bids for approximately 11 billion litres of ethanol to meet the requirement for blending 20 per cent ethanol in petrol.

The tender document explicitly states that no offers will be accepted for ethanol produced from sugarcane juice, sugar, or sugar syrup, as well as B-heavy molasses. This marks a significant shift in the sourcing of feedstock for the ethanol-blended petrol programme, which has previously relied on both grain and sugarcane-based ethanol to reduce crude oil imports and lower vehicle emissions.

In addition to the exclusion of sugar-based ethanol, the tender has also reduced the incentive for maize-based ethanol. The procurement price for maize-derived ethanol has been lowered from Rs 71.86 per litre to Rs 68.86 per litre. This adjustment is expected to impact the returns for producers supplying ethanol from maize, while simultaneously increasing the focus on alternative raw materials.

Concerns Over Sugar Availability

The decision to restrict sugar-based ethanol production comes amid rising concerns regarding domestic sugar availability and escalating prices. Poor rainfall in major sugar-producing states, such as Maharashtra and Karnataka, has raised the risk of a decrease in sugar output. As the world’s largest sugar consumer, India faces challenges in balancing its energy needs with food supply considerations, particularly when sugarcane is diverted for fuel production.

With the government’s latest tender, there is a clear intention to maintain adequate sugar supplies while pursuing energy security. 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. This diversification in feedstock sourcing is crucial for sustaining the blending programme while mitigating the impact on food supplies.

India has adopted petrol containing up to 20 per cent ethanol, known as E20, as a national standard. This initiative is part of broader efforts to reduce dependence on imported crude oil and minimise emissions. Ethanol, produced from various agricultural feedstocks, is blended with petrol to decrease fossil fuel consumption. The programme has significantly benefited domestic distilleries and provided farmers with an additional market for their agricultural produce.

Future Implications for Ethanol Production

The exclusion of sugar-based ethanol in the upcoming procurement cycle is expected to shift the focus towards grain-based production. This change will make factors such as feedstock availability, procurement prices, and distillery capacity increasingly important for meeting blending requirements. The procurement tender covers the ethanol supply year from November 2026 to October 2027, indicating a long-term strategy to adapt to changing market conditions.

The government’s approach reflects a careful balance between energy security and food supply management. By prioritising alternative feedstocks, India aims to ensure that its energy needs do not compromise food availability. The evolving landscape of ethanol production will require stakeholders to adapt to new procurement dynamics while maintaining the objectives of the petrol-blending programme.

As the country moves forward, the emphasis on grain-based ethanol production may open new opportunities for farmers and producers, while also addressing the pressing concerns regarding sugar supply. This strategic shift is likely to have lasting implications for both the agricultural and energy sectors in India.

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