India’s Ministry of Petroleum and Natural Gas, through BPCL, announced on 16 October that ethanol derived from sugar‑cane juice, sugar syrup and B‑heavy molasses will not be accepted for the 2026‑27 procurement cycle.
The 11 billion‑litre tender, aimed at sustaining the 20 per cent E20 petrol standard, now only accepts maize, broken rice, surplus rice procured by the Food Corporation of India and C‑heavy molasses. The incentive for maize‑based ethanol has been cut from ₹71.86 to ₹68.86 per litre, a move that will lower returns for grain growers.
The ruling comes amid reports of a 35‑percent drop in sugar output in Maharashtra and Karnataka after a dry season, which has pushed prices up by nearly 20 percent. A sugar‑cane farmer in Aurangabad said the ban would ease pressure on his crop, but he worries that the new feedstock mix could strain distillery capacity.
While the government deems the change essential to safeguard domestic sugar supplies and keep consumer prices stable, industry analysts warn that the limited availability of grain feedstock could tighten the ethanol supply chain. BPCL’s procurement team will evaluate bids until the end of the supply year, with final allocations expected in early 2027.