India bans sugar-based ethanol in 2026-27 tender to protect sugar supplies
The government has instructed oil marketing firms to exclude sugar-derived ethanol from the 2026-27 procurement tender, setting the sugar diversion quota at zero.
In the latest ethanol procurement tender, the Indian government has ordered oil marketing companies to eliminate any sugar-based feedstock, setting the sugar diversion target at zero for the 2026-27 supply year. The tender, issued jointly by Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp, seeks bids for 11 billion litres of ethanol beginning in November, but explicitly excludes ethanol produced from sugarcane juice, sugar or sugar syrup and B-heavy molasses.
This policy shift reflects concerns over dwindling sugar output in Maharashtra and Karnataka and soaring sugar prices. Bidders can still propose ethanol derived from corn, broken rice or surplus rice procured by the Food Corporation of India. Additionally, the subsidy for corn-based ethanol was cut to 2.79 rupees per litre, reducing the overall procurement price to 68.86 rupees per litre. The decision underscores the tension between meeting the mandatory E20 blend and preserving the nation’s sugar supply.
Why it matters
The policy could reshape India's ethanol market and affect sugar prices for consumers and farmers.
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