The Table Before the Tank: Who carries India’s ethanol now – Editorial by Uppal Shah
India’s 2026-27 ethanol procurement received 1,934.5 crore litres of offers against 1,100 crore litres tendered, led by maize. With sugar-based ethanol excluded to protect domestic supplies, the article highlights rising competition for grain feedstocks and calls for a unified framework balancing sugar, rice and maize allocations.
There is a quiet irony in this year’s ethanol tender. The blending programme that sugar mills nursed through its early years is now set to run, for an entire supply year, without a single litre from cane juice or B-heavy molasses. On 16th October, 2026, the oil marketing companies invited offers for around 1,100 crore litres for the year beginning 1st November, and the Government directed that sugar diversion be brought to zero. The offers have now come in, and they tell a story worth reading closely.
A decision that put the kitchen first
I believe the Government read the season correctly. ICRA estimates sugar production at 270 to 280 lakh tonnes for 2026-27, against domestic consumption of about 283 lakh tonnes. That would leave closing stocks at 35 to 45 lakh tonnes, less than two months of consumption. With cane output in Maharashtra and Karnataka under pressure, no responsible policymaker could allow sucrose to flow into fuel tanks while the kitchen shelf ran thin. The decision was timely, and the Department of Food and Public Distribution followed it through with clear instructions to state excise departments.
The response from the market is even more telling. Against 1,100 crore litres tendered, OMCs are believed to have received offers of around 1,934.5 crore litres. Maize alone accounts for 1,140.4 crore litres, FCI rice for 457.8 crore litres, damaged foodgrains for 239.6 crore litres and C-heavy molasses for 96.7 crore litres. For a programme that blended 1,134 crore litres in the year just ended, this is a vote of confidence. The ethanol blending programme has matured into a multi-feedstock system that can stand firm when one leg is withdrawn. That is a landmark achievement, and the Government deserves credit for building it.
The burden has moved, not vanished
The food-versus-fuel debate has not disappeared this year; it has changed address. FCI rice is capped at 324 crore litres and damaged foodgrains at 160 crore litres, while no individual distillery may source more than 30% of its quarterly offer from FCI rice.
Together, these two routes are capped at 484 crore litres against an OMC tender of 1,100 crore litres. With sugarcane juice, sugar syrup and B-heavy molasses excluded, maize is likely to shoulder a substantially larger share of the requirement. In the first cycle of last year’s allocation, maize carried about 478.9 crore litres. This year it is offering more than twice that volume.
Maize does not serve distilleries alone. It is an essential input for poultry feed, cattle feed and the starch industry, and every additional tonne diverted towards ethanol adds to the competition among these users. The fiscal arithmetic matters too. At the previous year’s procurement prices, every 100 crore litres shifted from B-heavy molasses to maize would imply an additional procurement cost of approximately ₹813 crore, given the price differential between ₹60.73 and ₹68.86 per litre. The Government has wisely trimmed the maize ethanol price by 4.2% this year, but the gap remains.
Meanwhile, the sugar sector’s distilleries, built with more than Rs 40,000 crore of investment and over 900 crore litres of capacity, are left with C-heavy molasses alone. ISMA has sought a revision of the C-heavy ethanol price from Rs 57.97 to Rs 62.23 per litre. That request deserves a sympathetic hearing, because those plants will be needed again the moment the cane crop recovers.
One ledger for every feedstock
This is where the next logical step lies. India now runs its ethanol programme across cane, rice, damaged grain and maize, but each feedstock is managed in its own compartment, through separate decisions taken at separate times. A single feedstock balancing framework, reviewed season by season, would bring them onto one ledger. It would weigh sugar balances, FCI stocks, maize output and feed demand together, and set allocations accordingly.
Such a framework should also carry a pre-announced trigger for the return of sugar diversion. If closing stocks are projected above a defined threshold, the juice and B-heavy routes would reopen in the next cycle. Mills could then plan their crushing, recovery and distillery maintenance with certainty, and lenders would see a policy with rules rather than a policy of surprises. The same logic could protect maize: if grain prices or feed inflation cross a set band, a larger share would shift back to rice or molasses.
I firmly believe the Government has already done the harder part. It has built a programme that can survive a sugar shortfall, and it has shown the will to put the consumer first. What remains is to turn this year’s prudent decision into a standing rule that every stakeholder, from the cane grower to the poultry farmer, can read in advance.
The table has been protected; now the tank needs a map that knows every field it draws from.
For further inquiries please contact Uppal Shah, Editor-in-Chief, at Uppal@chinimandi.com.
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Source : ChiniMandi
