India’s ethanol industry is adjusting to a significant pricing change after oil marketing companies (OMCs) reduced the procurement price of maize-based ethanol by ₹3 per litre for the 2026–27 Ethanol Supply Year (ESY). The decision has drawn criticism from grain-based distilleries concerned about profitability, while the sugar industry has welcomed the move as a step towards correcting pricing imbalances in the ethanol blending programme.
According to industry reports, the effective procurement price for maize-based ethanol has fallen from ₹71.86 to ₹68.86 per litre, with the incentive component reduced from ₹5.79 to ₹2.79 per litre. This marks the first reduction in the procurement price of maize-based ethanol since the programme’s expansion, following earlier increases intended to encourage production from alternative feedstocks. 
For ESY 2026–27, the procurement price of ethanol produced from C-heavy molasses remains ₹57.97 per litre, while the rate for ethanol made from damaged foodgrains, including broken rice, remains ₹64 per litre. The reported price of surplus rice supplied by the Food Corporation of India (FCI) has also been revised upwards by ₹1.82 per litre, according to the industry information provided.
The pricing revision comes alongside a broader change in ethanol procurement policy. In its October 16 tender for the 2026–27 supply year, OMCs excluded ethanol produced from sugarcane juice, sugar syrup and B-heavy molasses, following the government’s direction to bring sugar diversion for ethanol production to zero. The move aims to protect domestic sugar availability amid concerns over production and rising prices.
Grain-based distilleries have expressed concern that the lower maize ethanol price could squeeze margins, particularly where feedstock procurement and operating costs remain high. The sugar industry, meanwhile, has welcomed the correction but cautioned against creating preferential conditions for dedicated ethanol plants at the expense of integrated sugar mills.
The latest changes highlight the government’s challenge of balancing ethanol producers’ financial viability with food security, agricultural demand and the national target of blending 20% ethanol into petrol. With sugar-based feedstocks restricted under the current tender, maize and other approved grain sources are expected to play a greater role in meeting procurement requirements.
The impact of the revised pricing will depend on maize availability, feedstock costs, plant efficiency and OMC allocations. As the new supply year approaches, pricing parity and predictable procurement policies will remain central to sustaining investment in India’s ethanol industry.
