India Halts Sugar Diversion For Ethanol In 2026-27, Seeks 11 Billion Litres From Grains

India has directed oil marketing companies to halt the diversion of sugar for ethanol production during the 2026-27 supply year, prioritizing domestic sugar availability as output concerns and record-high prices persist. According to a tender issued Friday, ethanol produced from sugarcane juice, sugar syrup and B-heavy molasses has been excluded from the latest procurement process, marking a shift in the government's ethanol strategy.

Poor rainfall in Maharashtra and Karnataka has raised concerns about sugarcane production, prompting the move to protect domestic supplies. State-run Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation have jointly invited bids for 11 billion litres of ethanol for the supply year beginning November. The tender now permits ethanol produced only from corn, broken rice and surplus rice procured through the Food Corporation of India, while restricting sugarcane-based feedstocks.

The oil marketing companies have also reduced the procurement incentive for corn-based ethanol from ₹5.79 per litre to ₹2.79 per litre. The revised procurement strategy reflects the government's effort to balance its ethanol-blending programme with maintaining adequate sugar supplies for domestic consumption.