India’s ethanol blending programme is shifting away from sugar-based feedstock after state-run oil marketing companies excluded ethanol made from sugarcane juice, sugar syrup and B-heavy molasses from their 2026-27 procurement tender, placing greater importance on maize and other grain-based raw materials.
Bharat Petroleum Corporation Ltd (BPCL), acting on behalf of oil marketing companies, issued the tender on October 16 for around 11 billion litres of ethanol for the supply period from November 2026 to October 2027. The requirement is linked to India’s programme of blending 20% ethanol with petrol.
The tender document said the Government of India had directed that sugar diversion for ethanol be reduced to zero for the 2026-27 ethanol supply year. It also stated that no offers would be sought in the quantity bid tender for ethanol produced from sugarcane juice, sugar or sugar syrup and B-heavy molasses.
The decision is intended to preserve more sugar for domestic consumption while keeping the petrol-blending programme operational. India is the world’s largest sugar consumer, and concerns over sugar availability and prices have increased after poor rainfall in Maharashtra and Karnataka raised the risk of lower sugar output in two major sugar-producing states.
Under the revised procurement mix, oil companies can source ethanol made from maize, broken rice, surplus rice procured by the Food Corporation of India and C-heavy molasses. The shift makes grain availability and grain-based distillery capacity more important to meeting the national blending requirement during the 2026-27 supply year.
However, the tender also reduces the procurement support available to maize-based ethanol producers. The procurement price has been cut from Rs 71.86 to Rs 68.86 per litre. The incentive for maize-based ethanol has also been reduced from Rs 5.79 to Rs 2.79 per litre.
The changes alter the economics of the feedstock transition. Producers will have to meet the country’s ethanol requirement with a lower procurement price and incentive for maize-based ethanol, even as grain-based production takes on a larger role. The availability and price of maize, broken rice and surplus rice will therefore become important operational factors for distilleries and oil companies.
The latest tender does not end ethanol blending or withdraw the E20 standard. India has adopted petrol containing up to 20% ethanol as the nationwide standard. Ethanol, produced from agricultural raw materials including sugarcane and grains, replaces part of the fossil fuel used in vehicles and has created an additional market for domestic distilleries and farm produce.
The policy change reflects the competing demands within the programme. Ethanol blending is intended to reduce dependence on imported crude oil and support lower fossil-fuel use, but sugarcane and sugar diverted to fuel can also affect food availability when output is under pressure. The new tender prioritises domestic sugar supplies while requiring the grain-based ethanol system to carry more of the fuel programme.
The immediate implementation challenge will be ensuring that alternative feedstocks and distillery capacity are sufficient for the 11-billion-litre requirement. Oil companies will procure against the new feedstock rules for the supply period beginning in November 2026 and ending in October 2027.
