India has decided to exclude sugar-based ethanol from its 2026-27 procurement tender, marking a significant shift in its ethanol-blending strategy. The state-run oil marketing companies, Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation, issued a tender on October 16 seeking 11 billion litres of ethanol, but only from grain-based feedstocks like corn, broken rice, and surplus rice. The move comes as concerns over domestic sugar availability and rising prices have prompted the government to prioritize grain-based alternatives.
The tender specifies that ethanol produced from sugarcane juice, sugar syrup, and B-heavy molasses will not be considered for procurement. This decision reflects India's effort to balance its ethanol-blending program with the need to maintain adequate sugar supplies, especially amid lower production prospects due to poor rainfall in key sugar-producing states like Maharashtra and Karnataka.
The tender also reduces the incentive for corn-based ethanol to Rs 2.79 per litre from Rs 5.79 per litre, lowering the procurement price to Rs 68.86 per litre from Rs 71.86 per litre. This adjustment changes the commercial terms for suppliers relying on corn as a feedstock, potentially impacting procurement and production dynamics.
India has been expanding ethanol blending to reduce crude oil imports and curb pollution, with the E20 blend becoming the nationwide mandatory standard earlier in 2026. However, some motorists have expressed concerns about the compatibility of the E20 blend with older vehicles.