State-run oil marketing companies 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 seeks to protect domestic sugar supplies while sustaining its nationwide petrol-blending programme.
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 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. Ethanol is produced from agricultural feedstocks, including sugarcane and grains, and blended with petrol to displace a portion of fossil fuel consumption. The programme has created a substantial market for domestic distilleries while offering farmers an additional source of demand for agricultural produce.
“The Government of India has issued directions that sugar diversion for ethanol be reduced to zero for ethanol supply year 2026-27,” the tender document said. 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.
