New Delhi: Manufacturers producing ethanol from grains have asked the Central government to revise purchase prices and supply rules for 2026-27, warning that the current policy could make it difficult for maize-based factories to remain profitable and affect farmers’ earnings.
The government has decided that oil marketing companies (OMCs) will not buy ethanol made from sugarcane juice, sugar syrup and B-heavy molasses between November 2026 and October 2027. The decision has raised concerns among grain-based ethanol manufacturers about competition and the share of orders they may receive, Financial Express reported.
C.K. Jain, president of the Grain Ethanol Manufacturers’ Association (GEMA), said the purchase price of ethanol made from maize had been cut from Rs 71.86 to Rs 68.86 per litre. He said the reduction could put financial pressure on maize-based factories and affect the prices paid to farmers.
Jain also raised concerns over the prices fixed for ethanol made from rice. The latest government tender has set the purchase price at Rs 60.32 per litre for ethanol produced using surplus rice supplied by the Food Corporation of India (FCI) and Rs 64 per litre for ethanol made from damaged foodgrains. According to him, these rates could reduce the use of maize in ethanol production.
Manufacturers said maize prices had risen to around Rs 27 per kg from Rs 18 per kg a year ago, increasing production costs. They fear that factories using maize may receive fewer orders as the government could give preference to suppliers offering ethanol at lower prices.
According to industry estimates, ethanol production from damaged foodgrains and broken rice could increase from around 800 million litres last year to more than 7,000 million litres in the current supply year.
Jain said the availability of broken rice would be important in meeting the country’s ethanol requirements. However, its contribution to ethanol production had remained below 1,000 million litres in the past. Manufacturers are concerned that increased supplies of ethanol made from broken rice at Rs 64 per litre could intensify competition for maize-based factories. They fear this could force maize ethanol producers to lower their prices, eventually affecting the rates farmers receive for maize.
The Food Ministry had earlier said that the use of maize in ethanol production had provided farmers with a regular market for their produce and helped them get better prices.
During the 2024-25 ethanol supply year, around 13.11 million tonnes of maize was used to produce ethanol. This was compared with nearly 5 million tonnes of broken rice and surplus rice supplied by the FCI.
Last month, Bharat Petroleum Corporation Ltd (BPCL), on behalf of the OMCs, invited bids for 11,000 million litres of ethanol for the 2026-27 supply year. The purchase is intended to help achieve the target of blending 20% ethanol with petrol. The tender allows ethanol made from maize, broken rice, surplus rice supplied by the FCI and C-heavy molasses, which contains less sugar.
The government has excluded ethanol made from sugarcane juice, sugar syrup and B-heavy molasses to prevent more sugarcane from being used for ethanol production. The decision comes amid concerns that lower cane availability could affect sugar production.
BPCL has extended the deadline for submitting bids from October 29 to November 5, 2026.
Industry estimates show that sugar-based materials supplied around 2,750 million litres of ethanol in 2025-26, accounting for 26% of total supplies. Grain-based materials contributed around 7,610 million litres, or 74%. Of the grain-based supply, 5,180 million litres came from maize and 3,050 million litres from rice, according to industry sources.
The FCI supplies surplus rice for ethanol production only after meeting the needs of the National Food Security Act, other welfare schemes and maintaining the required reserve stocks. The corporation had stopped supplying rice to ethanol manufacturers during the 2022-23 supply year.
