The central government directed oil marketing companies to reduce sugar diversion for ethanol to zero for the 2026-27 supply year, stopping procurement of ethanol made from sugarcane juice, syrup, and B-heavy molasses.
The restriction, announced via a Bharat Petroleum tender, aims to preserve domestic sugar supplies and manage price pressures driven by El Niño weather risks affecting cane output in Maharashtra and Karnataka.
Procurement will still permit C-heavy molasses as a by-product, while the All India Distillers’ Association urged the government to adopt a balanced feedstock policy supporting maize-based ethanol.