Business · India Bureau
India excludes sugar-based ethanol from 2026-27 fuel tender
New Delhi has barred sugar-based ethanol from upcoming biofuel procurement tenders while reducing incentives for maize-based alternatives, reflecting concerns over domestic sugar supplies and elevated prices. The decision follows below-average rainfall in major sugar-producing regions that threatens output.
LSN India ·
India's petroleum ministry has excluded sugar-derived ethanol from fuel tenders scheduled for the 2026-27 fiscal year, signalling heightened concerns about the nation's sugar availability and market stability. The policy shift marks a significant departure from previous procurement strategies that had incorporated sugar-based feedstock for ethanol blending in petrol.
The move comes as Maharashtra, Karnataka and other key sugar-producing states grapple with inadequate rainfall during the monsoon season, raising concerns about harvest volumes and domestic supplies. India, one of the world's largest sugar producers and consumers, faces the prospect of tighter supplies and elevated prices if output declines as anticipated.
In addition to excluding sugar-based ethanol, authorities have reduced incentive structures for maize-derived ethanol, further narrowing feedstock options for biofuel producers. The recalibration reflects policymakers' prioritisation of food security and agricultural stability over accelerated biofuel expansion targets.
The government has been promoting ethanol blending in petrol as part of its renewable energy goals and to reduce crude oil imports. However, officials appear to be balancing these objectives against immediate concerns about commodity price inflation and domestic food grain availability. Further details on alternative feedstock preferences or revised tender conditions are expected in coming weeks.