New ethanol tender creates feedstock worries for grain and sugar industries

Oil Marketing Companies have released their latest ethanol procurement tender for the 2026-27 supply year, sparking worries among grain-based producers and parts of the sugar industry over feedstock pricing and allocation.

Tender Pricing And Rules

The tender fixes prices at ₹60.32 per litre for surplus foodgrains with a 108 crore litre cap for the first three quarters, ₹64 per litre for damaged foodgrains, and ₹66 per litre plus an extra ₹2.79 for maize. Ethanol made from sugarcane juice, sugar syrup, and B-heavy molasses is excluded, but C-heavy molasses ethanol remains eligible.

Industry Reactions

The Grain Ethanol Manufacturers Association argues the tender puts an unfair burden on rice-based feedstocks and weakens maize's role as an industrial material. GEMA president C.K. Jain stated that a balanced policy must support both maize and rice while reflecting different cost structures, urging the government and oil companies to review the framework. Meanwhile, the Indian Sugar & Bio-Energy Manufacturers Association welcomed the exclusion of sugarcane-based options to protect domestic sugar availability, but warned that long-term offtake agreements for dedicated ethanol plants could hurt the sugar sector.

Context

India's ethanol blending program aims to reduce crude oil imports and lower carbon emissions by mixing ethanol with petrol. Balancing different feedstocks like sugarcane, rice, and maize is a constant challenge for policymakers who must manage food security, water use, and industrial raw material costs at the same time.