India Bans Sugar-Based Ethanol to Stabilize Domestic Prices

The Government of India has ordered state-owned fuel retailers to cease the procurement of ethanol produced from sugar and sugarcane-based feedstocks effective November 1, 2026. This policy shift follows a powerful El Niño event that resulted in the weakest monsoon in more than a decade, which severely reduced sugarcane production and increased global sugar prices.

To increase the availability of sweeteners and stabilize domestic prices, state-owned refiners including Indian Oil Corp., Bharat Petroleum Corp., Hindustan Petroleum, Numaligarh Refinery Limited, and Mangalore Refinery and Petrochemicals Limited issued a joint tender for nearly 11 billion liters of ethanol. The tender explicitly excludes offers derived from sugarcane juice, sugar, sugar syrup, and B-Heavy molasses.

Suppliers remain permitted to provide ethanol derived from corn, damaged food grains, surplus rice, and C-heavy molasses. This adjustment comes after the government successfully reached its target of 20% ethanol blending in gasoline in 2025, a goal designed to lower the nation's reliance on imported oil.