The Indian Sugar & Bio-Energy Manufacturers’ Association (ISMA) has welcomed the government’s decision to exclude ethanol produced from sugarcane juice, sugar syrup and B-heavy molasses from the latest ethanol procurement tender for the Ethanol Supply Year (ESY) 2026–27. The move is intended to protect domestic sugar supplies while enabling India to continue its petrol-ethanol blending programme.
Bharat Petroleum Corporation Ltd (BPCL), on behalf of state-run oil marketing companies (OMCs), has issued a tender seeking approximately 11 billion litres of ethanol for the supply year beginning in November 2026. Under the procurement framework, ethanol produced from sugarcane juice, sugar syrup and B-heavy molasses is excluded, while ethanol derived from C-heavy molasses remains eligible. The policy seeks to balance domestic sugar requirements with the government’s target of blending 20% ethanol into petrol.
ISMA has stressed that meeting domestic sugar consumption requirements must remain a priority, particularly amid concerns over potential El Niño conditions and changing weather patterns in key sugarcane-growing regions. Adverse climatic conditions could affect sugarcane yields and overall sugar production, potentially tightening supplies. Restricting the diversion of sugar-producing feedstocks towards ethanol could therefore help preserve domestic availability and support market stability. 
The continued eligibility of C-heavy molasses-based ethanol provides an alternative for sugar mills to participate in ethanol production without diverting recoverable sugar from the domestic market. According to ISMA, this approach supports the country’s biofuel objectives while helping maintain a balance between sugar availability and ethanol supply.
However, the industry body has raised concerns over preferential allocation granted to dedicated ethanol plants with long-term offtake agreements under the ESY 2026–27 tender. ISMA has cautioned that extending this provision to future supply years could place sugar mills at a disadvantage and affect their competitiveness in the ethanol market. The association has urged the government to review the allocation framework for subsequent procurement cycles to ensure a level playing field for sugar mills and dedicated ethanol producers.
The latest procurement policy comes amid government efforts to strengthen domestic sugar availability and address concerns over rising prices. The decision highlights the challenge of balancing food supply priorities with India’s renewable fuel ambitions. A transparent and predictable ethanol procurement framework will be important for maintaining sugar market stability, supporting sugar mills and dedicated ethanol producers, and advancing the country’s long-term energy diversification goals.
