The Indian Sugar & Bio-Energy Manufacturers’ Association (ISMA) welcomed the government’s decision to exclude ethanol produced from sugarcane juice, sugar syrup, and B-heavy molasses from the latest ethanol procurement tender for the 2026–27 supply year. The industry body believes this measure will help protect domestic sugar availability while allowing the country to continue its petrol-ethanol blending programme.
Oil Marketing Companies Announce Ethanol Procurement Policy
Bharat Petroleum Corporation Ltd (BPCL), on behalf of state-run oil marketing companies (OMCs), issued a tender seeking bids for approximately 11 billion litres of ethanol for the supply year beginning in November 2026. Under the tender, OMCs have excluded ethanol produced from sugarcane juice, sugar syrup, and B-heavy molasses. However, they continue to allow ethanol produced from C-heavy molasses. The policy aims to balance domestic sugar requirements with the country’s target of blending 20% ethanol into petrol. ISMA welcomed the government’s calibrated approach to managing sugar availability and ethanol production.
Domestic Sugar Consumption Remains a Priority
ISMA emphasised that domestic sugar consumption must remain the industry’s foremost priority, particularly amid concerns over emerging El Niño conditions and weather variability in key sugarcane-growing regions. These climatic factors could affect sugarcane yields and overall sugar production. Therefore, restricting the diversion of sugar-producing feedstocks towards ethanol could help safeguard domestic supplies and support market stability.
C-Heavy Molasses Offers an Alternative for Ethanol Production
Although the latest tender excludes ethanol derived from sugarcane juice, sugar syrup, and B-heavy molasses, C-heavy molasses-based ethanol remains eligible for procurement. According to ISMA, this route allows sugar mills to continue supplying ethanol without diverting recoverable sugar from the domestic market. Consequently, the policy supports ethanol production while helping preserve sugar availability.
ISMA Raises Concerns Over Preferential Allocation
Despite welcoming the policy, ISMA has expressed concern over the preferential allocation granted to dedicated ethanol plants holding long-term offtake agreements under the Ethanol Supply Year (ESY) 2026–27 tender. The association cautioned that extending this provision to subsequent supply years could disadvantage sugar mills and adversely affect the industry’s competitiveness. Therefore, ISMA has urged the government to review the preferential allocation framework for future ethanol procurement cycles to ensure fair treatment of sugar mills and dedicated ethanol producers.
Balancing Sugar Availability and Ethanol Blending
In recent months, the government has introduced several measures to strengthen domestic sugar supplies and control rising prices. The latest ethanol procurement policy represents another effort to balance food-related priorities with the country’s renewable fuel objectives. As reported by money.rediff.com, the industry will need a predictable procurement framework that safeguards domestic sugar availability while supporting ethanol production and India’s broader energy diversification goals.
