Sugar-ethanol curbs put auto industry’s E20 transition to test; OMCs face ₹813-crore potential cost increase
Oil marketing companies could incur an additional ₹813 crore for every 100 crore litres of maize-based ethanol replacing cheaper B-heavy molasses ethanol in 2026-27. Procurement costs could rise 13.4%, from ₹60.73 to ₹68.86 per litre, depending on the feedstock mix under the 1,100-crore-litre tender.
Oil marketing companies could face additional procurement costs of ₹813 crore for every 100 crore litres of cheaper B-heavy molasses ethanol replaced by maize, following government restrictions on sugar-based supplies for 2026-27.
The switch would raise costs from ₹60.73 to ₹68.86 per litre, a 13.4 per cent increase that could squeeze fuel marketing margins.
The calculation is illustrative. The actual impact on the 1,100-crore litre procurement tender will depend on the mix of maize, rice and other eligible feedstocks. “The recent restriction on sugar diversion towards ethanol is expected to ease supply pressures amid lower sugar availability,” said Ankit Jain, Vice-President and Co-Group Head, ICRA.
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Source : BusinessLine
