NEW DELHI: Amid concerns over rising retail prices of sugar and availability during the festive season, the Centre has decided not to divert sugar for ethanol fuel blending this year, in order to create a sugar buffer next year to control prices.
In its latest tender to oil marketing companies (OMCs), including Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp, the government has excluded the diversion of high-sugar products like sugar cane juice, sugar syrup, and B-heavy molasses from the ethanol supply starting from November 2026. However, OMC will continue to use C-heavy sugarcane molasses.
The 20% ethanol blending programme will continue with alternative feedstocks, such as ethanol made from corn (maize), broken rice, and surplus rice procured from the Food Corporation of India. Further, the procurement from corn-based ethanol has been lowered to Rs 68.86 per litre. The incentives have also been reduced marginally.
Industry experts have welcomed the decision, noting that the government is prioritising food security amid reduced rainfall from strong El Niño conditions and anticipated food production stress in the upcoming Rabi season.
The All India Distillers’ Association (AIDA), the apex national body representing India’s bioethanol and alcohol manufacturing industry, commended the move and said that it is a balanced and considered approach in the Ethanol Supply Year (ESY) 2026–27 tender, taking into account the evolving feedstock landscape, agricultural priorities and the country’s growing ethanol requirements.
However, Vijendra Singh, President, AIDA, urged the government to consider revising the incentive and pricing structure for maize-based ethanol to keep production economically viable and sustain investments in grain-based distilleries.
A diversified feedstock base is essential to managing variations in agricultural output, market prices and regional availability. In ESY 2025-26, grains contribute 624 crore litres of ethanol, which comes around 70% of cumulative ethanol supplies by August 2025. Maize was the largest contributor followed by rice.
