India’s ethanol program is at a critical juncture as the country seeks to balance energy security with food supply stability. The 2026-27 procurement tender, issued on October 16, highlights this challenge by excluding ethanol from sugarcane juice, sugar syrup, and B-heavy molasses while keeping C-heavy molasses as an eligible feedstock. The procurement price for maize-based ethanol was also reduced from ₹71.86 to ₹68.86 per litre, reflecting the shift toward alternative feedstocks.
Grain-based ethanol has already become a cornerstone of India’s supply mix. During the 2025-26 supply year, oil marketing companies received 987 crore litres of ethanol by September 2026, with grain-based feedstocks accounting for 71.4% of total receipts. Maize contributed 413 crore litres, surplus Food Corporation of India (FCI) rice 222 crore litres, and damaged food grains 70 crore litres. This shift underscores the industry’s adaptability but also raises concerns about competing demand for grains used in poultry feed, livestock, and starch manufacturing.
The challenge lies in determining how much additional grain can be supplied at commercially viable prices. Higher feedstock costs, transportation, and processing expenses can impact plant utilization and investment decisions. Reliable ethanol supplies require a delicate balance between procurement economics, agricultural availability, and policy objectives.
Looking ahead, a more resilient ethanol ecosystem will require a broader feedstock strategy. Surplus rice, damaged food grains, and agricultural residues like rice straw and wheat straw could support advanced biofuel production. However, these alternatives require significant investment in processing technology, collection infrastructure, and transportation. They also offer opportunities to create rural employment and additional income for farmers and local entrepreneurs.