Economy
Restrictions on Sugar-Based Ethanol Procurement
Why in news
- Oil marketing companies have excluded ethanol made from sugarcane juice, sugar syrup and B-heavy molasses from their procurement tender for the 2026–27 ethanol supply year.
- The change seeks to protect domestic sugar availability following poor rainfall in important producing States.
What changes?
- The tender seeks approximately 11 billion litres of ethanol for the supply year beginning in November 2026.
- Ethanol from maize, broken rice, surplus Food Corporation of India rice and C-heavy molasses remains eligible.
- The procurement price for maize-based ethanol falls from ₹71.86 to ₹68.86 per litre, following a reduction in its incentive.
Understanding the feedstocks
| Feedstock | Explanation |
|---|---|
| Sugarcane juice and syrup | Using them directly for ethanol reduces the quantity available for producing sugar. |
| B-heavy molasses | It is obtained before maximum sugar extraction. Producing ethanol from it involves sacrificing some recoverable sugar. |
| C-heavy molasses | It remains after more extensive sugar extraction and contains less recoverable sugar. It remains eligible under the tender. |
| Grains | Their starch is converted into sugars and then fermented to produce ethanol. |
Significance and concerns
- E20 means petrol containing 20% ethanol by volume.
- Blending replaces part of petrol consumption and can reduce dependence on imported crude oil.
- Diverting agricultural produce towards fuel can compete with food, animal feed, land and water requirements.
- Greater reliance on grains makes their availability, procurement prices and distillery capacity increasingly important.
- The restriction concerns the specified procurement cycle; it should not be described as a permanent prohibition on all sugar-industry ethanol.
















