Faced with a projected dip in cane harvests and an uptick in retail sugar prices, the government has instructed state-owned fuel retailers to halt purchases of ethanol derived from sugar and related cane-based raw materials for the supply period running from November 1, 2026 through to the end of the 2026–27 cycle, a move aimed at keeping more of the sweetener available for domestic consumption.
Under the latest procurement tender, four feedstock categories — sugarcane juice, sugar, sugar syrup, and B-heavy molasses — were left out of eligibility for ethanol sourcing. A tender document, as reported by a broadcast news outlet, shows that five state-owned refining companies — Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation, Numaligarh Refinery Limited, and Mangalore Refinery and Petrochemicals Limited — have pooled their procurement efforts to seek bids covering close to 11 billion litres of ethanol ahead of the next supply cycle.
India ranks among the two largest sugar-producing nations on earth, and a below-average monsoon has left this season's harvest looking noticeably smaller than usual. Keeping the domestic sugar supply intact remains a stated policy priority, with ethanol sourcing expected to draw on feedstocks beyond sugarcane.
Ethanol derived from sugarcane juice, sugar, sugar syrup, or B-heavy molasses falls outside the scope of what the new tender is seeking. Sugarcane resources allocated to these feedstocks are drawn from a pool that also supplies ethanol manufacturing, meaning a portion of that raw material shifts away from sugar output.
Ethanol derived from C-heavy molasses, food grains rendered unfit for consumption, rice held in surplus by the Food Corporation of India, corn, and additional raw materials authorised under the National Policy on Biofuels all remain available as supply options for vendors.
Tighter domestic sugar supplies — the result of weaker harvests and a sustained rise in prices — appear to have prompted the policy adjustment. Below-average monsoon rains, driven in part by El Niño patterns, have weighed on harvest volumes across key cane-growing belts, trimming projections for the country's total sweetener output. Wet-weather disruptions to sugarcane harvests have put both Maharashtra and Karnataka under agricultural strain.
When harvests fall short, the available pool of sugar within the country contracts, putting upward pressure on what buyers pay at both retail and wholesale levels. A policy limiting sugar-derived feedstocks in ethanol production would channel a greater share of the sugarcane harvest toward the food supply rather than the fuel industry.
In addition to the restrictions placed on ethanol procurement, sugar mills received authorisation to offload output from October 2026 within that month and the one following, beyond the volumes already covered by their standard monthly release allocations. Mills that turn out 1,000 metric tonnes of sugar in October are permitted to place that entire volume on the market across the two-month window, on top of whatever tonnage their standard monthly allocations already allow. Boosting sugar supplies within the local market during the upcoming harvest period stands as the policy's stated aim.
Boosting the share of ethanol blended into petrol has become a tool for cutting reliance on crude oil purchased abroad while also channelling demand toward biofuels grown within the country. Reporting from a broadcast outlet described how an ethanol-blending milestone — mixing the fuel additive into petrol at a 20 per cent ratio — arrived in 2025, five years ahead of the original schedule set by the government.
Under the revised procurement rules, grain-based ethanol and other approved substitutes receive a stronger purchasing preference, while the use of sugarcane as a fuel feedstock is kept within set boundaries.
