October 19, 2026: State-run oil marketing companies have barred ethanol made from sugarcane juice, sugar syrup and B-heavy molasses from their latest procurement tender for the 2026-27 supply year for blending in petrol, as the government seeks to protect domestic sugar supplies while sustaining its nationwide petrol-blending programme.

The tender, issued on October 16 by Bharat Petroleum Corporation Limited (BPCL) on behalf of oil marketing companies (OMCs), seeks bids for around 11 billion litres of ethanol for the supply year beginning in November to meet the requirement of doping 20% ethanol in petrol. It also cuts the incentive for maize-based ethanol, lowering the procurement price to ₹68.86 per litre from ₹71.86.

“The Government of India has issued directions that sugar diversion for ethanol be reduced to zero for the ethanol supply year 2026-27,” the tender document said.

The restrictions mark a shift in feedstock sourcing for the ethanol-blended petrol programme, which has relied on both grain-based and sugarcane-based ethanol to reduce crude oil imports and cut vehicle emissions.

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, according to the document. India has adopted petrol containing up to 20 per cent ethanol, known as E20, as the nationwide standard as part of efforts to reduce oil import dependence and emissions.

Ethanol is produced from agricultural feedstocks, including sugarcane and grains, and blended with petrol to displace a portion of fossil fuel consumption. The programme has created a substantial market for domestic distilleries while offering farmers an additional source of demand for agricultural produce.

The shift away from sugar-based ethanol in the 2026-27 procurement cycle 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. The procurement tender covers the ethanol supply year from November 2026 to October 2027

(Source: PTI)