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India has barred oil marketing companies (OMCs) from procuring ethanol made from sugarcane juice, sugar, sugar syrup and B-heavy molasses for the 2026-27 ethanol supply year, with the government directing that sugar diversion for ethanol be reduced to zero. The restriction is set out in a quantity bid tender dated October 16, issued by five state-run oil companies for the supply of around 1,100 crore litres of denatured anhydrous ethanol between November 1, 2026, and October 31, 2027. The tender allows procurement from C-heavy molasses, damaged food grains, surplus rice sourced from the Food Corporation of India (FCI), maize and other eligible feedstocks under the National Policy on Biofuels.
The move comes amid concerns over domestic sugar availability and prices. The participating companies are Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation , Mangalore Refinery and Petrochemicals and Numaligarh Refinery. Corn, rice and damaged food grains among eligible feedstocks The tender specifies different procurement rates depending on the feedstock.
Ethanol made from maize has a basic rate of ₹66.07 per litre, with an additional incentive of ₹2.79 per litre, excluding Goods and Services Tax (GST). The basic procurement rate for ethanol made from damaged food grains is ₹64 per litre, while surplus rice procured from FCI carries a rate of ₹60.32 per litre. Ethanol made from C-heavy molasses has a basic rate of ₹57.97 per litre.
Transportation charges and applicable GST are payable over and above the basic rates. Ethanol made from other eligible feedstocks under the National Policy on Biofuels will be procured at the lowest prevailing rate under the tender. The tender covers four supply quarters, running from November 2026 to January 2027, February to April 2027, May to July 2027, and August to October 2027.
However, offers for ethanol made from surplus FCI rice will not be accepted for the fourth quarter. Allocations subject to pending court proceedings The tender also states that ethanol allocations under the first quarter of the 2026-27 supply year will remain subject to the outcome of pending legal proceedings concerning the OMCs’ ethanol allocation methodology. The companies have reserved the right to revise, reduce, withdraw or cancel allocations in line with court orders, without liability for compensation to suppliers.
The tender requires suppliers to offer ethanol produced from eligible indigenous feedstocks at their own registered or approved distilleries. Trading or sourcing ethanol from third parties for onward supply to the OMCs is not permitted. The restrictions apply to procurement under this tender for the 2026-27 supply year, which begins on November 1.
Also read: Can the Russia Sanctions Bill waiver by Donald Trump bring more relief to Indian markets? Tags Home / India News / India bars sugarcane juice, syrup-based ethanol in 2026-27 tender; OMCs seek 1,100 crore litres
Source: CNBC TV18
