India ethanol tender bars cane-juice routes to protect sugar supply and support E20 blending

India’s sugar industry body ISMA backed a fresh ethanol procurement move by state-run oil marketing companies. The tender blocked ethanol made from sugarcane juice, sugar syrup and B-heavy molasses. ISMA said this step should help keep enough sugar for domestic use. The decision linked sugar availability with the ongoing petrol blending programme.

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The procurement relates to the 2026-27 ethanol supply year, also called ESY 2026-27. Oil marketing companies aimed to protect local sugar stocks while keeping blending targets on track. ISMA said the approach balanced sugar supply needs with ethanol availability. The association also flagged risks from weather changes in key cane areas.

Ethanol tender terms and ISMA response

Bharat Petroleum Corporation Ltd BPCL issued the tender on October 16 for oil marketing companies. The tender invited bids for around 11 billion litres of ethanol. Supplies were meant for the year beginning November. The volume was linked to the plan to mix 20 per cent ethanol in petrol.

Under the ESY 2026-27 tender, ethanol from sugarcane juice, sugar syrup and B-heavy molasses was not allowed. Ethanol made from C-heavy molasses stayed eligible. ISMA said C-heavy molasses let mills support ethanol output. ISMA added that this route avoided diversion of recoverable sugar from the market.

In a statement on Monday, ISMA said the government had adopted a measured policy stance. The statement said domestic sugar availability should come first. It also warned about production uncertainty this season. The statement noted possible impacts from emerging El Nino conditions and weather shifts.

Ethanol allocation concerns for sugar mills

ISMA also objected to preferential allocation in the same tender. The association said dedicated ethanol plants with long-term offtake agreements received preference. ISMA said this arrangement applied for ESY 2026-27 already. ISMA warned that extending it could affect sugar mills in later years.

The industry body urged the government to review the preferential allocation method for future ethanol supply years. ISMA said sugar mills should not face disadvantages in later tenders. The association wanted the preference restricted to ESY 2026-27. ISMA linked fair allocation to stable sugar production and ethanol participation.

ISMA’s comments came as the Centre worked to improve local sugar availability. In recent months, the government took several steps to increase supply. The measures also aimed to curb rising sugar prices. ISMA said the latest tender rules supported sugar needs while keeping ethanol blending going.

With inputs from PTI