India Bars Ethanol Made from Sugarcane Juice and Molasses in 2026/27 Tender

India has barred oil marketing companies from procuring ethanol made from sugarcane juice, sugar syrup and B-heavy molasses for the 2026/27 supply year. The government has set sugar diversion for ethanol production at zero in the latest tender, issued on Friday, according to Reuters. 

The decision comes as poor rainfall in Maharashtra and Karnataka raises concerns about sugarcane production. Retail sugar prices have also reached record highs, prompting the government to prioritise domestic availability. 

11 Billion Litres of Ethanol Up for Bids 

Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation have invited bids for 11 billion litres of ethanol for the supply year starting November 2026. 

The tender permits ethanol made from corn, broken rice and surplus rice procured by the Food Corporation of India. Sugar-based feedstocks are not included in the current bidding process. 

India has previously used surplus sugar production to supply its ethanol programme. The latest restriction leaves sugarcane available for sugar production at a time when lower rainfall has raised concerns about the size of the crop. 

Corn-Based Ethanol Procurement Price Cut 

The tender also reduces the incentive for corn-based ethanol to ₹2.79 per litre from ₹5.79 per litre. The procurement price has been lowered to ₹68.86 per litre from ₹71.86 per litre. 

The change comes as oil marketing companies shift their procurement towards feedstocks other than sugar. In August, Reuters reported that the government was considering restrictions on sugarcane use for ethanol production following concerns about output in Maharashtra and Karnataka. 

Ethanol Blending Programme Continues 

The restrictions come as India continues its push to reduce crude oil imports and vehicular pollution through ethanol blending. Earlier this year, the government made a 20% ethanol blend in petrol, known as E20, the nationwide mandatory standard.  

Some motorists have raised concerns about its compatibility with older vehicles. For the 2026/27 supply year, oil marketing companies will procure ethanol made from corn and rice under the new tender, without sugar-based alternatives.  

The decision puts domestic sugar availability ahead of sugarcane-based ethanol procurement as concerns over production and prices persist. 

Read More: India Directs Telecom Operators to Display Caller Names from November 1, 2026! 

Conclusion  

The 2026/27 tender excludes sugar-based ethanol and allows procurement from corn, broken rice and surplus rice. The changes come amid concerns over sugar production and domestic prices. 

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