Ethanol Policy Shift: Oil Companies Seek 11 Billion Litres, Cut Incentive for Corn-Based Ethanol

India’s state-run oil marketing companies have excluded ethanol produced from sugarcane juice, sugar syrup and B-heavy molasses from their latest procurement tender for the 2026–27 supply year. The move aims to protect domestic sugar availability while continuing the country’s petrol-ethanol blending programme.
 

Bharat Petroleum Corporation Limited (BPCL), on behalf of the oil marketing companies, issued the tender on October 16, seeking approximately 11 billion litres of ethanol for the supply year beginning in November. The procurement is intended to support India’s target of blending 20 per cent ethanol with petrol.
 

The tender has also reduced the incentive for corn-based ethanol to ₹68.86 per litre from the earlier rate of ₹71.86 per litre.
 

According to the tender document, the government has directed that sugar use in ethanol production be reduced to zero during the 2026–27 supply year. Consequently, bids for ethanol manufactured from sugarcane juice, sugar syrup and B-heavy molasses will not be accepted under the procurement process.
 

The policy change is expected to alter the sourcing strategy for raw materials used in the petrol-ethanol blending programme.
 

Under the tender, suppliers can submit bids for ethanol produced from corn, broken rice, surplus rice procured by the Food Corporation of India (FCI), and C-heavy molasses.
 

The revised procurement rules reflect the government’s effort to maintain the ethanol-blending programme while reducing the use of sugar-based raw materials and safeguarding domestic sugar supplies.