India’s ethanol industry has backed the government’s tender for 1,100 crore litres of ethanol for the supply year 2026-27 but has asked for higher prices and more flexibility, ThePrint reported. The tender, floated by BPCL on October 16, covers supplies from November 1, 2026, to October 31, 2027, and excludes ethanol made from sugar, juice, syrup or B-heavy molasses. Permitted feedstocks are C-heavy molasses, maize, damaged foodgrains and surplus rice from the Food Corporation of India. The Indian Sugar and Bio-Energy Manufacturers Association wants the price for C-heavy molasses ethanol raised from Rs 57.97 to Rs 62.23 a litre, and the All India Distillers’ Association says Rs 60.32 a litre for FCI rice ethanol is not enough.
The argument for the tender is that it gives producers certainty and supports the 20 percent blending goal. A volume of 1,100 crore litres over a full year gives distilleries a large and predictable buyer, which is why the industry body is backing the plan even while it negotiates, and the list of feedstocks, including damaged grain and FCI rice, lets mills and distillers use materials that would otherwise have little value. Ethanol blended into petrol also reduces the amount of crude the country has to import at a time when the oil bill is up 46 percent in the first half of the year, so each litre displaces imported fuel. The industry’s willingness to support the tender shows that the basic framework works.
The argument against the current terms is that costs are rising and incentives are being cut. The distillers’ association objected to a reduction in the incentive for maize ethanol from Rs 5.79 to Rs 2.79 a litre, which would lower the effective price from Rs 71.86 to Rs 68.86 a litre, a fall of about 4 percent. The sugar association’s Director General Deepak Ballani said that “in seasons of surplus sugar production, the diversion of surplus sugar towards ethanol is essential to prevent excess supply,” which is exactly the route that the tender closes. If prices do not rise with the cost of production, some distilleries may bid for less than the volume on offer.
The tender matters because ethanol links farm incomes, the sugar industry, the fuel bill and climate policy. Maize growers, rice stocks held by the FCI and sugar mills all depend on the decisions in the tender, and the oil marketing companies need the volumes to meet blending targets. With crude above 110 dollars, ethanol’s value as a substitute is higher than it was a year ago, which gives the government a reason to keep the programme attractive. The industry has asked for flexibility, and how far the authorities move will show their priorities between consumers, farmers and mills. The supply period runs from November 1, 2026, to October 31, 2027, so decisions on pricing are needed within days. Sugar-based routes are excluded, which leaves maize, damaged grain, FCI rice and C-heavy molasses to supply 1,100 crore litres.
The industry accepts the tender and wants a better price. The final terms will determine whether 1,100 crore litres can be supplied.