The Centre has directed oil marketing companies to set sugar diversion for ethanol production at zero under India’s 2026–27 ethanol supply tender, introducing a significant change in the feedstocks eligible for the next procurement cycle.
The tender issued on October 16 excludes offers for ethanol produced from sugarcane juice, sugar, sugar syrup and B-heavy molasses. State-run oil marketing companies have invited bids for around 11 billion litres of ethanol for the supply year running from November 2026 to October 2027.
The procurement arrangement shifts attention towards other eligible sources, including maize, broken rice and surplus rice procured through the Food Corporation of India. C-heavy molasses remains a distinct category and should not be confused with B-heavy molasses, which is excluded under the tender.
The decision comes as India faces concerns about sugar availability, production prospects and prices. It also presents a policy balancing act: the country wants to maintain its ethanol-blending programme to reduce dependence on imported petroleum, while ensuring that sufficient sugar remains available for domestic consumption.
Editorial Analysis
Why This Matters
The decision affects two important policy priorities: keeping essential food commodities available and maintaining India’s transition towards greater ethanol blending in petrol. For consumers, sugar availability and prices are the immediate concerns. For fuel producers, the key issue is whether eligible alternative feedstocks can supply sufficient ethanol at viable costs. Sugar mills and farmers may also be affected by changes in procurement demand and mill-level economics. The decision’s actual impact will become clearer as contracts are awarded, production plans adjust and the 2026–27 supply year progresses.
