The oil companies want 1,100 crore litres for November 2026 to October 2027. Unlike last year, they will buy no ethanol from cane juice or B-heavy molasses, pay Rs 68.86 instead of Rs 71.86 for maize, cap FCI rice at 108 crore litres a quarter instead of requiring 40% of grain offers from it, and allocate the cheapest feedstock first where last year put sugar first. Every award is subject to Supreme Court cases on allocation.
India’s 2026-27 Ethanol Tender Drops Cane Juice, Cuts Maize by Rs 3 a Litre and Flips From Sugar-First to Cheapest-First
India’s oil marketing companies opened bidding on 16 October for about 1,100 crore litres of ethanol for the year from November 2026 (BPCL e-tender 26985). Set beside last year’s tender (tender 22376), three things change. Ethanol made from cane juice, sugar syrup and B-heavy molasses is not being bought at all, because the government has told the industry to divert no sugar to ethanol this year. Maize, the feedstock that carried the blending programme last year, gets Rs 3 a litre less. And the order of allocation flips: last year, after cooperative sugar mills and plants with long-term contracts, sugar-based ethanol was taken first and everything else after it; this year the rest goes to the cheapest feedstock first, which puts maize last in line. Every award is also provisional, pending Supreme Court cases over how ethanol is allocated.
How much to trust it. Both years’ terms are read directly from the two tender documents. Last year’s outcome (offers and allocation by feedstock) and the court cases come from press reports, and the FCI rice price for this year from the DFPD OMSS(D) 2026-27 policy order as reported by Rural Voice and Outlook India; the BPCL tender portal and government sites could not be opened from here. Where this piece calculates something, it says so.
What changed from last year
| ESY 2025-26 tender | ESY 2026-27 tender | Change | |
|---|---|---|---|
| Tender | Tender 22376 (ref. 1000442332), 23 September 2025; bids due 7 October | BPCL e-tender 26985 (ref. 1000466894), 16 October 2026; bids due 29 October | |
| Quantity sought | About 1,050 crore litres: 100 (Nov), 200 (Dec-Jan), 280, 250 and 220 | About 1,100 crore litres: 300, 300, 250 and 250 by quarter | Up about 5%; more front-loaded |
| Feedstocks bought | All: cane juice, sugar and syrup, B-heavy and C-heavy molasses, damaged grain, FCI rice, maize | Cane juice, sugar, syrup and B-heavy molasses excluded after a government direction to cut sugar diversion to zero; a new “other feedstocks” category (sweet sorghum, cassava, sugar beet and similar) at the lowest price | Cane enters only as C-heavy molasses |
| Maize price | Rs 66.07 basic + Rs 5.79 incentive = Rs 71.86 a litre | Rs 66.07 basic + Rs 2.79 incentive = Rs 68.86 a litre | Rs 3 a litre less |
| Other prices | Cane juice Rs 65.61, B-heavy Rs 60.73, C-heavy Rs 57.97 (2024-25 rates carried over); damaged grain Rs 64.00; FCI rice Rs 60.32 | C-heavy Rs 57.97, damaged grain Rs 64.00, FCI rice Rs 60.32; other feedstocks Rs 57.97 | Unchanged where still bought |
| FCI rice | 52 LMT, 1 Nov 2025 to 30 Jun 2026, about 234 crore litres a year; none in Aug-Oct; every bidder’s grain offer had to be at least 40% FCI rice; rice sold at Rs 2,320 a quintal | 72 LMT to 30 Jun 2027, 324 crore litres; allocation capped at 108 crore litres a quarter in Nov-Jul; none in Aug-Oct; no 40% floor; no rice price stated | More rice, but a quarterly cap replaces the floor |
| Allocation order | By zone. Deficit zones took all offers. In surplus zones: cooperative sugar mills and long-term-contract plants first; then sugar, syrup and cane juice, then B-heavy and C-heavy molasses, then all other feedstocks | No zones. Cooperative sugar mills and long-term-contract plants first; then cheapest feedstock first: C-heavy and other feedstocks, FCI rice, damaged grain, maize | Priority flips from sugar-first to cheapest-first |
| Long-term-contract plants | Preference up to the contracted quantity, “on best endeavour basis”; anything above it treated like any other bidder | Same, plus a new preference for plants from the 2021 long-term tender up to their design capacity, within the cheapest category still open; “not a guarantee of offtake” | Written around the court cases |
| Court cases | – | Every allocation provisional, subject to Supreme Court cases led by SLP 22411 of 2026 and the interim arrangement of 4 August 2026, which include last year’s tender | Awards can be cut without compensation |
| Bid validity | To 31 July 2026 | To 31 October 2027 | Whole supply year |
Prices: maize loses its premium
The basic rates are unchanged for every feedstock still bought. The only price change is the maize incentive, cut from Rs 5.79 to Rs 2.79 a litre, which brings maize ethanol from Rs 71.86 to Rs 68.86. That is still the highest price in the tender, Rs 4.86 above damaged grain and Rs 8.54 above FCI rice. The All India Distillers’ Association has asked for the cut to be reviewed, citing higher raw-material, energy and logistics costs, according to ChiniMandi.
The saving to the oil companies depends on how much maize they end up buying. At last year’s maize volume of about 479 crore litres, Rs 3 a litre is about Rs 1,440 crore a year, by this blog’s arithmetic; the actual figure will be known only after allocation.
The cane gap
Last year cane juice, sugar syrup and B-heavy molasses together supplied about 26.4% of the roughly 1,048 crore litres allocated, about 276 crore litres. None of that is being sought this year. The government’s reason, as reported, is a smaller sugar crop in Maharashtra and Karnataka and lower opening sugar stocks. Only C-heavy molasses, the final residue of sugar-making, which supplied about 1.2% last year, remains on the cane side. Grain will have to supply almost all of the 1,100 crore litres.
One cost moves against distillers even where the ethanol price does not. Last year’s tender stated FCI’s rice price for distilleries, Rs 2,320 a quintal; this year’s does not, and the price rises to Rs 2,390 a quintal for November 2026 to June 2027, according to the Department of Food and Public Distribution’s OMSS(D) 2026-27 policy order of 2 July 2026 (Rural Voice; also Outlook India), while the tender keeps rice ethanol at Rs 60.32 a litre.
The supply should be there. Last year distillers offered about 1,305 crore litres from grain alone, more than this year’s whole requirement. The question is which grain.
Who gets allocated first: sugar-first becomes cheapest-first
Last year’s tender divided the country into zones. Zones short of local supply took every offer from their own distilleries. In zones with surplus offers, cooperative sugar mills and the contracted quantity of long-term-contract plants came first, and the rest was filled in this order: sugar, syrup and cane juice; then B-heavy and C-heavy molasses; then “all other feedstocks”, meaning grain, with maize, FCI rice and damaged grain treated alike. Surplus offers then topped up short zones pro rata.
This year’s tender drops the zones and the sugar-first order. When offers exceed the requirement in a quarter, it allocates in this order:
- Cooperative sugar mills registered with the national federation, for their eligible offers.
- Dedicated ethanol plants with long-term offtake agreements, up to the annual quantity in their contracts, cheapest feedstock first.
- Everyone else, cheapest feedstock first: C-heavy molasses and other feedstocks at Rs 57.97, then FCI rice at Rs 60.32 (capped at 108 crore litres a quarter), then damaged grain at Rs 64.00, then maize at Rs 68.86. Within the cheapest category still open, plants from the oil companies’ first long-term tender (2021) get preference up to their design capacity on a “best endeavour” basis, and the rest is shared pro rata.
Uttar Pradesh is allocated separately because of state excise rules, and a linear-programming optimiser then assigns depots, with at least three suppliers per depot cluster and no supplier above 40% of a cluster.
Last year maize competed on equal terms with other grain once sugar was placed. This year, because maize is the dearest feedstock, it is allocated only after cheaper offers run out, unless the plant has a long-term contract or is a cooperative. FCI rice is capped, and none at all can be offered for August to October, when the requirement is 250 crore litres. ChiniMandi’s analysis argues that damaged grain, mostly broken rice, at Rs 64 could take share from maize. How much depends on offers this blog cannot see.
Other terms
| Term | ESY 2025-26 tender | ESY 2026-27 tender |
|---|---|---|
| Transport, base slab (0-75 km) | Rs 306 a kilolitre | Rs 311 a kilolitre |
| Transport, per km (75-1,200 km) | Rs 2.24 a kilolitre | Rs 2.36 a kilolitre |
| Diesel benchmark | Rs 90.51 a litre (10 Sep 2025) | Rs 98.08 a litre (30 Sep 2026), 8.4% higher |
| Hill and north-east supply | 10% extra on transport to J&K, Himachal and the north-east | Not in the text |
| Capacity rule | Offers within licensed capacity as declared in the ethanol portal | Offers within consent-to-operate capacity times 83, 81, 83 and 83 days |
| Minimum offer | 100 kilolitres per feedstock per period | 120 kilolitres per feedstock per quarter |
| Minimum allocation per depot | 100 kilolitres | 40 kilolitres |
| Depot-wise allocation published | Only for November and December-January; later quarters assigned 3-4 weeks ahead | For all four quarters |
| Security deposit | 3% of basic value incl. incentive | 3% of ex-mill value (same) |
| Short-supply penalty | 3% of price on shortfall below 95%; under 50% in a quarter is non-performance | Same |
| Reconciliation | Supplier must respond in 7 days; may reject a statement three times | Supplier has 21 days; unanswered statements settled automatically |
| Payment | Within 21 days | Within 21 days (same) |
| New declarations | – | Ethanol made at own distillery, not traded; FCI rice used only for ethanol |
| Quality | IS 15464:2022 | Same, plus total chloride below 3 mg/kg |
Transport rates rise roughly in line with diesel, which was 8.4% dearer at the benchmark date. The 10% extra for supplying hill and north-eastern depots, in last year’s text, does not appear this year. Penalties, deposits and payment terms are unchanged.
The court cases
Both the opening disclaimer and the allocation annex make every allocation, award and purchase order provisional. They are subject to a writ petition of 2025, special leave petitions in the Supreme Court led by SLP 22411 of 2026, cases from the Bombay High Court’s Nagpur bench and the Patna High Court transferred to the Supreme Court on 4 August 2026, and an interim arrangement approved that day. Those cases challenge the oil companies’ allocation method, including last year’s tender 22376. Last year’s cooperative-first priority was contested by dedicated grain plants: one, VINP Distilleries, won a Karnataka High Court order in June 2026 for a larger allocation under its long-term contract, and the Supreme Court ordered status quo on BPCL’s appeal. On 4 August 2026 the Supreme Court allowed the oil companies to award an extra 149 crore litres for August to October 2026, taking last year’s total to about 1,197 crore litres. Bidders must accept that allocations can be cut, moved or cancelled without compensation. The tender’s long “best endeavour” clause, which says the preference for long-term plants is “not a guarantee of offtake”, reads as written with those cases in mind.
What is not known
- Offers. How much each feedstock will offer, which decides how much maize is bought. Bids close on 29 October.
- B-heavy and juice plants. What happens to distilleries built around cane juice and B-heavy molasses, and to the sugar mills that relied on ethanol sales to pay cane farmers.
- Court outcome. The Supreme Court could change the allocation method after awards are made.
- Later cycles. The tender is cycle 1. Whether cane juice returns in a later cycle depends on the sugar crop.
What would fix this
- The oil companies should explain the switch from sugar-first to cheapest-first in the tender itself, with the expected cost saving, since it changes which plants get orders.
- The oil companies should publish the allocation by feedstock, state and supplier type for each cycle, as ChiniMandi’s reporting of last year’s figures shows is possible, so that the effect of the maize cut can be seen.
- Tie the FCI rice cap to live central-pool stocks, not a figure fixed for the year, so that rice for ethanol tapers if stocks fall.
- Announce the sugar-diversion rule before the cane crushing season and before distillers commit feedstock, with a rule for when cane juice comes back, instead of deciding each year.
These are proposals from this blog, not recommendations any agency has adopted.
Corrected 25 October 2026. The FCI rice price for the 2026-27 supply year is attributed to the DFPD’s OMSS(D) 2026-27 policy order (Rural Voice, Outlook India), not to a Business Standard report of a Rajya Sabha reply: Rs 2,320 a quintal applies only until 31 October 2026 and Rs 2,390 from 1 November 2026. The tender text itself (quarter split, 72 LMT, 108 crore litre cap, cheapest-first order) could not be re-checked against the BPCL document, which is not available online.
Sources and caveats
This year: BPCL e-tender 26985, ref. 1000466894, 16 October 2026, read in full from a copy of the document; the portal itself could not be opened from here. Last year: ESY 2025-26 quantity bid tender 22376 (ref. 1000442332) of 23 September 2025, read in full from a copy of the 85-page document; ChiniMandi on the ESY 2025-26 tender; BioEnergy Times on the allocation (ChiniMandi data); IamRenew on offers of 1,776 crore litres; BioEnergy Times on the FCI rice price; Bar and Bench on the status-quo order; Business Standard on the 149 crore litre top-up; Mongabay on the cooperative-first priority; B-heavy and other ex-mill prices as given in Parliament replies, via this blog’s maize-price post. Reaction and context: ChiniMandi on the ESY 2026-27 tender; ChiniMandi analysis on maize; ChiniMandi on AIDA’s request; Deccan Chronicle; Onmanorama on the sugar-diversion curb. The ChiniMandi pages, Deccan Chronicle and Onmanorama were subsequently opened and read in full (25 October 2026). The FCI rice price for November 2026 to June 2027 (Rs 2,390 a quintal; Rs 2,320 until 31 October 2026) is from Rural Voice on the OMSS(D) 2026-27 policy and Outlook India, which also reports 7.2 million tonnes allocated to ethanol for 2026-27. The 26.4% cane share, the 276 and 479 crore litre volumes and the Rs 1,440 crore saving are this blog’s arithmetic on the reported allocation shares. Research notes: out/research/ethanol-tender/ in the blog’s repository.
About this article: Researched, written and edited by Umashankar Triplicane Dwarakanathan, with AI research assistance; every figure is meant to trace to the primary source cited. See the Editorial Policy for how sourcing, AI use and corrections work.
