India has instructed state-owned fuel retailers to stop purchasing ethanol made from sugar and key sugarcane raw materials, a move expected to curb rising sugar prices.
Drought conditions this summer severely damaged sugarcane output, driving global sugar prices higher. The policy will take effect with India's new crushing season, which begins on November 1.
State-owned refiners including Indian Oil Corporation, Bharat Petroleum Corporation, Hindustan Petroleum Corporation, Numaligarh Refinery, and Mangalore Refinery and Petrochemicals have jointly issued a tender under the government's latest directive, seeking to procure nearly 11 billion liters of ethanol in the new season.
The tender document released on Friday specifies that this fixed-quantity tender will not accept bids for ethanol produced from sugarcane juice, sugar, syrup, or B-heavy molasses.
India is the world's second-largest sugar producer. A strong El Nino phenomenon caused the weakest monsoon in more than a decade, and the country's sugarcane harvest is expected to fall below last year's level, tightening sugar supply.
India has long used sugarcane and grains to produce ethanol, both to reduce its reliance on imported oil and to boost farmers' incomes. The Modi government moved its target of blending 20% ethanol into gasoline forward by five years, and achieved that goal in 2025.
Suppliers participating in this tender may submit ethanol produced from C-heavy molasses, damaged grain, surplus rice procured by the Food Corporation of India, corn, and other feedstocks permitted under the national biofuel policy.
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