India’s oil marketing companies (OMCs) have barred the use of sugarcane juice, sugar syrup and B-heavy molasses for ethanol production during the 2026–27 supply period to safeguard domestic sugar availability. The move comes amid concerns over sugarcane production and the potential impact on national sugar stocks. Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum have invited bids for approximately 11 billion litres of ethanol for the supply period beginning in November 2026. However, the procurement guidelines exclude ethanol produced from sugarcane juice, sugar, sugar syrup and B-heavy molasses.
Centre Prioritises Domestic Sugar Availability
The restriction aims to protect domestic sugar supplies and help maintain price stability. Concerns over below-normal rainfall in key sugarcane-producing states, particularly Maharashtra and Karnataka, have raised questions about the upcoming harvest and its potential impact on sugar production. Consequently, policymakers are prioritising sugar availability for domestic consumption rather than diverting additional sugarcane-derived feedstocks towards ethanol production.
Ethanol Producers to Shift to Alternative Feedstocks
Under the revised procurement guidelines, ethanol manufacturers must rely on alternative feedstocks to meet their supply commitments. The OMCs have permitted bids for ethanol produced from:
Maize
Broken rice
Damaged foodgrains
C-heavy molasses
Surplus rice procured through the Food Corporation of India (FCI)
This shift is expected to increase the importance of grain-based ethanol production and alternative feedstock supply chains during the 2026–27 ethanol supply period. The guidelines also prohibit the procurement of ethanol from external sources and require participating companies to use their own licensed distilleries.
India Maintains Its E20 Ethanol Blending Programme
Despite the restrictions on sugar-based feedstocks, India intends to continue its ethanol blending programme. The E20 mandate requires petrol to contain 20% ethanol, helping reduce dependence on imported crude oil. Ethanol producers can continue supplying the programme using permitted grain-based feedstocks and C-heavy molasses. This approach seeks to balance the country’s renewable fuel objectives with the need to protect domestic food supplies.
OMCs Reduce Incentives for Maize-Based Ethanol
Alongside the feedstock restrictions, the OMCs have reduced the incentive for maize-based ethanol from ₹5.79 to ₹2.79 per litre. As a result, the procurement price has fallen from ₹71.86 to ₹68.86 per litre. The reduction could put pressure on profit margins for producers supplying maize-based ethanol, particularly those facing higher grain procurement, processing and transportation costs. Therefore, manufacturers will need to assess feedstock availability, production costs and operating efficiency to remain competitive under the revised procurement structure.
Feedstock Availability to Shape Ethanol Supply in 2026–27
The ethanol supply period will run from November 2026 to October 2027. During this period, grain availability, transportation infrastructure and fluctuations in open-market crop prices will influence procurement costs and the ability of producers to fulfil contracts. Moreover, increased reliance on maize and other grains could intensify competition for agricultural feedstocks, making efficient sourcing and supply-chain management increasingly important.
Balancing Sugar Security with Energy Independence
India is the world’s largest sugar consumer and has expanded ethanol blending to reduce its dependence on imported crude oil. However, diverting sugarcane and sugar-derived products towards ethanol production can tighten domestic supplies when sugar production faces weather-related constraints. By restricting sugar-based ethanol feedstocks while permitting alternatives, the government aims to balance food security with its renewable fuel ambitions. As reported by tribuneindia.com, the effectiveness of this approach will depend on the availability and affordability of alternative feedstocks and the ability of ethanol producers to maintain supplies throughout the 2026–27 procurement cycle.
