Centre Bars Sugarcane-Based Ethanol Procurement to Protect Sugar Supply

The central government has introduced a major change in ethanol procurement for the 2026–27 supply year, covering November 2026 to October 2027. The latest tender excludes ethanol produced from sugarcane-based raw materials to improve domestic sugar availability and help control prices. Bharat Petroleum Corporation Limited (BPCL), on behalf of public-sector oil marketing companies, issued the ethanol procurement tender on October 16. Under its terms, bids will not be accepted for ethanol made from sugarcane juice, sugar or sugar syrup, and B-heavy molasses. However, ethanol produced from maize, broken rice, surplus rice procured by the Food Corporation of India (FCI), and C-heavy molasses remains eligible for procurement.

The procurement price for maize-based ethanol has also been reduced from ₹71.86 to ₹68.86 per litre. The additional incentive has been cut from ₹5.79 to ₹2.79 per litre, potentially affecting producers' earnings. With sugarcane-based feedstocks excluded from the tender, grain-based ethanol distilleries are likely to gain greater importance in the supply chain. The policy aims to preserve domestic sugar availability while continuing the ethanol-blending programme for petrol, although the revised pricing may affect the economics of ethanol production from alternative feedstocks.