# Govt curbs sugar diversion for ethanol

> Sugar mills warn of financial losses as government shifts ethanol procurement to grain-based sources.
- Title: Govt curbs sugar diversion for ethanol · mint | Shortify
- Summary: Sugar mills warn of financial losses as government shifts ethanol procurement to grain-based sources. Indian sugar mills fear financial strain as government…
- Keywords: india, sugar mills, ethanol procurement, sugarcane, bpcl, omcs, ethanol blending, sugar surplus, fair and remunerative price, de dedicated ethanol plants, long-term offtake agreements, c-heavy molasses
- Source: mint — https://livemint.com/news/india/govt-curbs-sugar-diversion-for-ethanol-mills-warn-of-losses-during-surplus-year-11792415215561.html
- Author: Vijay C Roy,Rituraj Baruah
- Published: 2026-10-19T16:17:20+00:00
- Read time: 2 min
- Topics: india, sugar mills, ethanol procurement, sugarcane, bpcl, omcs, ethanol blending, sugar surplus, fair and remunerative price, de dedicated ethanol plants, long-term offtake agreements, c-heavy molasses
## Government shifts ethanol procurement
State-run oil marketing companies have excluded ethanol produced from sugarcane juice, sugar syrup and B-heavy molasses from their latest procurement tender for the 2026-27 supply year for petrol blending.
## Sugar mills warn of financial strain
Sugar mills warn that prolonged exclusion from ethanol making could strain their finances when sugar production rises and prices fall sharply.
## Tender excludes sugarcane-based ethanol
The tender, issued on 16 October by Bharat Petroleum Corporation Ltd (BPCL) on behalf of other oil marketing companies (OMCs), seeks bids for around 11 billion litres of ethanol for the supply year beginning November…
## Ethanol feedstock restrictions
Under the current procurement tender, ethanol made from sugarcane juice, sugar syrup and b-heavy molasses has been excluded, while c-heavy molasses-based ethanol remains eligible.
## Government reduces sugar diversion
The government has decided to procure mostly grain-based ethanol for its petrol blending programme this year, as it seeks to prevent the diversion of sugarcane and boost sugar production at a time when acreage has…
## Sugarcane acreage decline
According to agriculture ministry data, India's sugarcane acreage declined by 26,000 hectares to 5.86 million hectares in 2026-27 compared to 2025-26.
## Sugar production concerns
Sugar production in the 2025-26 season was around 28 million tonnes. India’s annual sugar consumption is estimated at around 28-28.5 million tonnes.
## ISMA raises concerns
The Indian Sugar & Bio-energy Manufacturers Association (ISMA) raised concerns over the government's preferential procurement from Dedicated Ethanol Plants (DEPs) holding long-term offtake agreements (LTOAs).
## Financial risks for mills
ISMA argues that extending the arrangement to subsequent years could restrict sugar mills’ participation in ethanol procurement tenders, particularly during periods of surplus production when diverting excess sugar to ethanol helps support domestic prices and…
## Price revision request
ISMA also called for a revision in the procurement price of c-heavy molasses-based ethanol, which remains unchanged at ₹ 57.97 per litre, to ₹ 62.23 per litre.
## AIDA supports government
The All India Distillers’ Association (AIDA) said balancing feedstock availability, food security, farmer interests and energy security is particularly important amid agricultural uncertainties.
## What happens next
Sugar mills urge the government to retain sugarcane-based ethanol feedstocks in future procurement cycles to avoid financial strain during surplus production periods.
## Key takeaway

Indian sugar mills fear financial strain as government excludes sugarcane-based ethanol from 2026-27 procurement, risking losses during surplus production periods.