India is reportedly set to bar the use of sugarcane juice, syrup and B-heavy molasses for ethanol production during the 2026-27 ethanol supply year (ESY), which begins on 1 November. The government is expected to notify the decision before the new supply year starts. No formal notification had been reported at the time of writing, so this remains an expected rule, not a published one.
Why the Restriction Is Being Considered
The move is linked to tighter domestic sugar supplies. Sugar production in 2025-26 was hit by crop diseases, waterlogging and adverse weather in key producing states. Against an initial estimate of about 34.3 million tonnes, production was estimated at about 30.6 million tonnes in August, including sugar diverted to ethanol. After that diversion, net production was about 27.9 million tonnes, compared with normative domestic consumption of 28.0 to 28.5 million tonnes. About 3 million tonnes of sugar, nearly 10% of output, was diverted to ethanol in 2025-26. Opening stocks for the new season were about 3.75 million tonnes on 1 October, against nearly 5 million tonnes a year earlier, and lower output is expected in Maharashtra and Karnataka.
What It Would Change in Practice
Barring these three feedstocks would let mills recover more sugar from available cane. Mills would instead rely mainly on C-heavy molasses, with additional ethanol from maize and rice helping maintain the 20% blending target. In the 2025-26 allocation to oil marketing companies, cane juice and syrup made up about 15.8% and B-heavy molasses about 10.5%, together roughly a quarter of the total, while C-heavy molasses made up about 1.2%. Ethanol demand for ESY 2026-27 is expected at 11.5 to 12 billion litres, so the grain sector would have to carry a bigger share.
The E20 Question
The share of sugar diverted for ethanol fell to about 9% in 2025-26 from about 12% in 2022-23, and roughly three-quarters of India's ethanol now comes from grains, mainly maize. The 20% blending target is expected to remain achievable and the impact on mills should be limited, since sugar offers better returns, though sugar export restrictions may need to continue and additional imports may be needed. Ethanol demand is also adding to competition for maize and contributing to higher poultry feed costs, a reminder that a larger grain share has its own trade-offs.
A Policy That Has Moved Before
India has changed course on these feedstocks repeatedly. In December 2023 the food ministry barred the use of cane juice and syrup for ESY 2023-24, then within about a week allowed cane juice and B-heavy molasses again, within a cap of 1.7 million tonnes of sugar diverted. For ESY 2024-25 it again allowed juice, syrup and B-heavy molasses. That history is one reason the final 2026-27 rule, including any caps or exceptions, is worth watching once it is notified.
What Remains Unconfirmed
The notification itself, any volume caps, and the allocation of grain-based and C-heavy molasses ethanol for 2026-27 have not been published in the reports reviewed.
Source: Times of India, 5 October 2026.
