Centre's 2026-27 ethanol tender excludes cane juice and B-heavy molasses, worrying sugar mills

Under the programme to blend ethanol with petrol, the Centre has made a significant change to its ethanol procurement policy for the 2026-27 supply year. The new tender places no demand for ethanol made from sugarcane juice, sugar syrup or B-heavy molasses. As a result, sugar mills may have to change their production plans. The decision covers the period from 2026 to October 31, 2027.

The government issued the tender on October 16. It plans to buy about 1,100 crore litres of ethanol for blending with petrol. However, ethanol made from sugarcane juice, sugar syrup and B-heavy molasses is not included. Production and sales of ethanol projects running on these raw materials could be affected.

The main aim behind the decision is believed to be keeping sugar adequately available in the domestic market and containing pressure on prices. Maharashtra and Karnataka are the major sugarcane-growing states, and concern is being voiced there over sugar production. Against this background, priority is being given to keeping sugar available for people to eat rather than diverting it to fuel.

Sugar mills that have invested in making ethanol from cane juice and B-heavy molasses may now have to find another arrangement for production and sales. There is concern that the earnings of ethanol projects, the mills' financial plans and payments to cane farmers could be indirectly affected.

However, this does not mean the government has stopped buying every kind of ethanol. The tender includes ethanol made from maize, broken rice, surplus rice held by the Food Corporation of India, and C-heavy molasses. The ethanol blending programme thus continues, and production of grain-based ethanol may get more room.

Mill operators expressed displeasure over the decision. Rajendra Nagwade, chairman of the Sahakarmaharshi Nagwade Cooperative Sugar Factory at Shrigonda, said: "We took crores of rupees in bank loans relying on the Centre's policy. If the government does not buy ethanol from sugarcane, the factory will fall into losses. How will we pay the bank loan instalments? The sugar industry is already in trouble, and this will put it in deeper trouble. This decision will ruin sugar factories and farmers. The Centre should rethink the decision. We are against this decision."

Duvauk Dhage Patil, director of Dhage Patil Ethanol Project Limited, Shrigonda, said the government's decision deserves to be welcomed. According to him, if the government supplies raw material from abroad, this year's target for procuring grain-based ethanol can be met.