India shifts ethanol sources to protect sugar supply
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Oil companies in India will change how they source ethanol, excluding sugar-based raw materials from their 2026-27 procurement tender.
Bharat Petroleum Corporation Ltd issued the tender on behalf of state-run oil marketing companies, seeking around 11 billion litres of ethanol for the period from November 2026 to October 2027.
This decision follows government direction to reduce sugar diversion for ethanol production to zero for that year, aiming to maintain domestic sugar supplies amid concerns about lower output due to poor rainfall in key growing regions like Maharashtra and Karnataka. Oil companies will now prioritize ethanol made from maize, broken rice, surplus rice procured by the Food Corporation of India, and C-heavy molasses.
However, producers of maize-based ethanol will receive a reduced procurement price of Rs 68.86 per litre, down from Rs 71.86, and a lower incentive of Rs 2.79 per litre, compared to Rs 5.79 previously. India adopted a nationwide standard of petrol containing up to 20% ethanol, known as E20, to reduce reliance on imported crude oil.
While this move changes the raw materials used, the government intends to continue the ethanol-blending programme, balancing fuel needs with domestic food security and supporting the country’s distilleries and farmers. The availability of raw materials, prices, and distillery capacity will determine whether enough ethanol can be supplied during the 2026-27 supply year.
