New Delhi, October 2026 : The Centre has directed state-owned oil marketing companies to stop procuring ethanol produced from sugarcane juice, sugar, sugar syrup and B-Heavy molasses for the supply year beginning November 1, 2026. The decision aims to safeguard domestic sugar availability and moderate prices amid concerns over lower sugarcane output following unfavourable monsoon conditions.
Five public sector companies—Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Limited (HPCL), Numaligarh Refinery Limited and Mangalore Refinery and Petrochemicals Limited (MRPL)—have jointly issued a tender seeking nearly 11 billion litres of ethanol for the new supply year.
The tender follows the revised government directions and excludes ethanol produced from the specified sugar-based feedstocks. The move reflects the government's effort to balance the country's biofuel blending requirements with the need to maintain adequate sugar supplies for domestic consumption.
Alternative Feedstocks Permitted
Under the revised procurement framework, suppliers can offer ethanol produced from alternative feedstocks, including C-heavy molasses, damaged food grains, surplus rice procured by the Food Corporation of India (FCI), corn and other materials permitted under the National Policy on Biofuels.
The continued use of these sources is expected to support ethanol supplies for blending with petrol while limiting the diversion of sugarcane-derived products away from the sugar market.
India, the world's second-largest sugar producer, is facing concerns over a smaller sugar crop compared with the previous year. The report attributes the weaker production outlook to El Niño conditions and an unfavourable monsoon, which could affect sugarcane output and the availability of raw material for sugar mills.
The restriction on sugar-based ethanol procurement is intended to help preserve domestic sugar availability and ease potential pressure on prices. The actual impact will depend on sugar production, consumption patterns and the availability of alternative ethanol feedstocks.
Sugar Mills Get Additional Sales Flexibility
Separately, the government has permitted sugar mills to sell sugar produced during October 2026 in October and November over and above their regular monthly release quotas.
The relaxation provides mills with additional flexibility to market their October production across the two months without being restricted to the quantities allocated under their normal monthly quotas.
For instance, a mill producing 1,000 metric tonnes of sugar in October may sell that production during October and November in addition to the quantities permitted under its regular monthly allocations, according to the supplied report.
The measure comes as the government seeks to manage domestic sugar availability amid uncertainty over the upcoming production cycle.
Balancing Ethanol Blending and Sugar Availability
India has expanded ethanol production from sugarcane and grains as part of its strategy to reduce dependence on imported crude oil, lower fuel import requirements and promote alternative energy sources.
The country advanced its target of achieving 20 per cent ethanol blending in petrol by five years and, according to the report, achieved the target in 2025.
The latest procurement restrictions represent a shift in feedstock sourcing rather than a complete halt to ethanol procurement. Oil companies will continue to seek supplies from permitted sources, including grain-based ethanol and C-heavy molasses.
The challenge will be to maintain adequate ethanol availability for the fuel-blending programme while protecting the sugar sector from shortages and excessive price pressures.
With nearly 11 billion litres sought for the upcoming supply year, the tender highlights the scale of demand from public sector oil companies. The revised rules will require suppliers to adjust their feedstock choices in line with the government's directions.
The coming months will indicate how effectively alternative feedstocks can meet ethanol demand while sugar mills and policymakers respond to changing production conditions and domestic market requirements.
(Disclaimer :The content of this article is sourced from a news agency and has not been edited by the Mavericknews30 team.)
