No sugar diversion for ethanol production: Govt to OMCs

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The OMCs have floated a cumulative requirement of 1,100 crore litres with 300 crore litres to be supplied in the first two quarters and 250 crore litres each in the last two quarters

By BL New Delhi Bureau

Updated - October 17, 2026 at 09:52 PM. | New Delhi

Amidst expected low sugar output and high domestic retail prices, the government has directed oil marketing companies (OMCs) to stop producing ethanol from sugarcane Juice, sugar, sugar syrup and B-Heavy molasses (BHM).

“Government of India (GoI) has issued directions that sugar diversion for ethanol be reduced to zero for ESY 2026-27. Thus, no offers have been sought for Ethanol produced from Sugarcane Juice/Sugar/Sugar Syrup and B-Heavy molasses in this Quantity Bid Tender,” the OMCs said in the tender issued for the upcoming ethanol supply year (ESY).

Accordingly, ethanol produced from different feedstocks namely C-Heavy molasses (CHM), damaged food grains, surplus rice procured from FCI, maize, other feedstocks as per National Policy on Biofuels (NPB) have been provided as separate categories in the quantity bid form, the tender added.

The tender is for quantity bids for the ESY 2026-27—November 2026 to October 2027. Bidders have to offer ethanol in KL (kilolitres) against the requirement of OMCs, feedstock wise, quarter wise for November 2026-January 2027, February 2027-April 2027, May 2027-July 2027 and August 2027-October 2027.

The OMCs have floated a cumulative requirement of 1,100 crore litres with 300 crore litres to be supplied in the first two quarters and 250 crore litres each in the last two quarters.

Producers have to offer ethanol made from sugar beet, sweet sorghum, etc and starch containing materials such as cassava, rotten potatoes, agro food / pulp industry waste, etc. and any other feedstock permitted under National Policy on Biofuels 2018.

For ESY 2026-27, the OMCs will pay ₹57.97 per litre for ethanol sourced from C-Heavy Molasses, ₹64 per litre (damaged food grains), ₹60.32 per litre (surplus rice procured from FCI) and ₹66.07 per litre from maize.

An incentive of ₹2.79 litre (excluding GST) will be payable over and above the Basic Rate of Ethanol sourced from Maize.

The gross sugar output is expected at 310 lakh tonne for the sugar season 2025-26 (October-September). In the current season, the output is expected to be around 280 lakh tonne.

While the industry is yet to issue its estimates for the sugar season 2026-27, the government is likely to come out with its estimates next month.

Published on October 17, 2026

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