India has directed its state owned fuel retailers to stop procuring ethanol made from sugar and key sugarcane based feedstocks from November 1, the start of the new supply year, in a move aimed at keeping a lid on sugar prices after dry weather hit the cane crop. Bloomberg first reported the halt on Saturday, and the tender document cited by the IANS wire the same day confirmed that no offers were sought for ethanol produced from sugarcane juice, sugar, sugar syrup or B heavy molasses.
The joint tender behind the direction is large. Five public sector refiners, Indian Oil, Bharat Petroleum, Hindustan Petroleum, Numaligarh Refinery and Mangalore Refinery and Petrochemicals, are seeking nearly 11 billion litres of ethanol for the new supply year. Suppliers can still offer ethanol made from C heavy molasses, damaged food grains, surplus rice procured from the Food Corporation of India, corn and other feedstocks permitted under the National Policy on Biofuels, so the blending programme continues on grain and residue feedstocks while sugar based supply is pulled out.
The crop context explains the urgency. India is the world’s second biggest sugar producer, and El Nino contributed to the weakest monsoon in more than a decade, cutting cane output. Earlier this month the US Department of Agriculture’s Foreign Agricultural Service in New Delhi cut its forecast for Indian sugar production in the 2026/27 season to 29.5 million metric tons from 33.6 million, citing a severe rainfall deficit that is expected to reduce sucrose content and effective harvesting area.
Alongside the ethanol halt, the government has permitted mills to sell sugar produced in October during October and November over and above regular monthly release quotas, a liquidity measure that puts more physical sugar into the domestic market in the opening weeks of the season. India had brought forward its target of blending 20 percent ethanol into gasoline by five years and achieved it in 2025, so the suspension is a food price decision taken from a position of having already met the blending goal, not a retreat from the programme itself.