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POLICY & REGULATIONS

Trade bodies hail govt ethanol supply policy for 2026-27
Tuesday, 27 October, 2026, 08 : 00 AM [IST]
Our Bureau, New Delhi
Trade bodies have welcomed the Union Government's recent decision to ban the use of sugarcane juice, sugar syrup, and B-heavy molasses for ethanol production in the upcoming 2026–27 supply year.

Shankar Thakkar, national secretary of CAIT and president of the Edible Oil Federation, termed the decision a crucial, though delayed, step toward safeguarding domestic sugar availability and stabilising food prices.

Welcoming the shift in policy, Thakkar noted that traders have consistently warned the government over the last four years against diverting essential food crops for biofuel manufacturing in a nation of over 1.4 billion people.

"In a country as populous as India, using food grains and food crops to manufacture fuel is not sustainable in the long run," said Thakkar, adding that diverting food crops toward fuel generation during years with low rainfall and impacted agricultural output can prove exceptionally costly for the nation.

Thakkar highlighted that emerging concerns over El Nino and adverse weather patterns have already impacted agricultural output in major sugarcane-producing states like Maharashtra and Karnataka.

These supply constraints, combined with festive demand, led to a noticeable spike in domestic sugar prices over the past two months. Despite initial regulatory measures, including import adjustments and stock limits, market prices remained elevated, prompting the government to zero out sugar-based ethanol procurement for the new supply year beginning November 1, 2026.

Under the new procurement tender released by state-run Oil Marketing Companies (OMCs) for the 2026–27 Ethanol Supply Year (ESY), the allocation for ethanol derived from sugarcane juice, sugar syrup, and B-heavy molasses has been set to zero. This measure aims to divert maximum sugarcane crushed directly into domestic sugar production to maintain a balanced demand–supply ratio.

Thakkar meanwhile urged the government to extend this scrutiny to grain-based ethanol production, specifically ethanol derived from maize, broken rice, and surplus food grains.
 
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