India Recalibrates Ethanol Strategy to Balance Clean Fuel and Sugar Supply

India is considering adjustments to its sugarcane-based ethanol policy for the 2026–27 season as it seeks to balance the country’s biofuel ambitions with domestic sugar availability. The proposed changes would reduce the amount of sugarcane diverted toward ethanol while allowing India to maintain its 20% ethanol blending target for petrol.

Under the proposed approach, India could encourage greater use of corn and rice as ethanol feedstocks, helping sustain ethanol production while reducing pressure on sugarcane supplies. The government is also considering prioritizing ethanol produced from C-heavy molasses, which is generated after most of the sugar has already been extracted from sugarcane.

The move comes as India faces concerns over sugar production following poor rainfall in major sugar-producing regions. Diverting less sugar toward ethanol could increase domestic sugar availability and help ease pressure on prices.

At the same time, the proposed strategy would allow India to continue advancing its ethanol-blending programme. Diversifying feedstocks could provide greater flexibility in the country's biofuel supply chain while reducing dependence on sugarcane for ethanol production.

The proposed policy reflects India’s efforts to balance clean-fuel development, agricultural resource use and domestic food supply. By adjusting the mix of ethanol feedstocks rather than reducing its overall blending ambition, India could continue supporting its transport-sector energy transition while responding to changing agricultural conditions.

India's ethanol policy is a live example of how climate targets, food security and rural income politics intersect, and the calibration will keep shifting as monsoon and sugar cycles play out. Our energy-transition and supply-chain-and-operations teams help sugar mills, oil marketing companies and biofuel investors evaluate what these recalibrations mean for feedstock strategy, offtake risk and BRSR reporting.