India has taken a significant step in its ethanol-blended petrol program by restricting the use of sugar-based ethanol in its latest procurement tender for the 2026-27 supply year. The government has directed that no ethanol produced from sugarcane juice, sugar syrup, or B-heavy molasses be included in the tender, which seeks bids for around 11 billion litres of ethanol. This move aims to protect domestic sugar supplies amid concerns over lower output due to poor rainfall in key producing states like Maharashtra and Karnataka.
The tender, issued by Bharat Petroleum Corporation Limited (BPCL) on behalf of state-run oil marketing companies, also reduces the incentive for maize-based ethanol, lowering the procurement price from ₹71.86 to ₹68.86 per litre. This reduction is expected to lower returns for maize-based ethanol producers. The tender allows bids for ethanol produced from maize, broken rice, surplus rice procured by the Food Corporation of India (FCI), and C-heavy molasses.
The shift away from sugar-based ethanol underscores the government's effort to balance its energy-security objectives with the need to maintain adequate sugar supplies and contain domestic prices. India has adopted petrol containing up to 20% ethanol, known as E20, as the nationwide standard to reduce oil import dependence and emissions. The procurement tender covers the ethanol supply year from November 2026 to October 2027.
The restrictions mark a notable change in feedstock sourcing for the ethanol-blended petrol programme, which has relied on both grain-based and sugarcane-based ethanol. The move is likely to increase the importance of grain-based production and make feedstock availability, procurement prices, and distillery capacity key factors in meeting blending requirements.