India stops buying sugar-based ethanol for 2026-27 to protect sugar supplies

India’s government has told state-run oil marketing companies to stop buying ethanol made from sugar for the 2026-27 ethanol supply year, which runs from November to October, according to a tender the companies issued on Friday.

“Government of India (GoI) has issued directions that sugar diversion for ethanol be reduced to zero for ESY 2026-27,” the tender said, as reported by The Hindu BusinessLine. As a result, no offers were sought for ethanol made from sugarcane juice, sugar, sugar syrup or B-heavy molasses.

The companies are seeking 11 billion litres of ethanol for the year from other feedstocks, including C-heavy molasses, a by-product left after recoverable sugar is extracted, as well as damaged food grains, surplus rice from the Food Corporation of India and maize. The tender sets prices ranging from 57.97 rupees a litre for ethanol from C-heavy molasses to 66.07 rupees for maize-based ethanol.

The move aims to preserve domestic sugar supplies, the Hindustan Times reported, as prices rise ahead of festivals and as dry weather linked to El Niño threatens cane output in major producing states such as Maharashtra and Karnataka. Ex-mill sugar prices reached a record 7,000 rupees per 100 kg in some markets in August, the newspaper said.

The All India Distillers’ Association welcomed the approach but called for a more balanced feedstock policy, including incentives for maize-based ethanol.