Overview
The OMCs have released the tender for the ESY 2026‑27. The tender fixes procurement rates for different feedstocks and has sparked objections from grain‑based ethanol producers and the sugar industry over pricing, allocation and the role of maize.
Key Developments
- Procurement price for SFG set at ₹60.32 per litre with a cap of 108 crore litres for the first three quarters.
- Price for DFG fixed at ₹64 per litre.
- Maize‑based ethanol priced at ₹66 per litre plus an additional ₹2.79 per litre.
- Ethanol from sugarcane juice, sugar syrup and B‑heavy molasses excluded; only C‑heavy molasses‑based ethanol remains eligible.
- Dedicated ethanol plants with LTOAs receive preferential allocation.
Important Facts
The GEMA notes that during ESY 2025‑26, DFG‑based ethanol allocation was about 60 crore litres. For ESY 2026‑27, the industry expects allocation to exceed 700 crore litres, a ten‑fold rise. GEMA argues that the tender places a heavy burden on rice‑based feedstocks (SFG and DFG) and may marginalise maize, which has a lower cost structure.
The ISMA welcomes the exclusion of sugarcane‑juice and B‑heavy molasses ethanol, citing the need to protect domestic sugar availability. However, ISMA warns that continued preferential treatment of LTOA‑holding plants could disadvantage sugar mills that rely on C‑heavy molasses for ethanol.
Exam Relevance
Understanding the tender is crucial for GS‑III (Economy) questions on agricultural‑industrial linkages, ethanol‑blending policy, and food‑grain management. The debate highlights the trade‑off between using surplus food grains for energy versus food security, a recurring theme in policy‑making. It also illustrates how industry bodies (GEMA, ISMA) influence policy revisions, relevant for GS‑II (Polity) and GS‑IV (Ethics) discussions on stakeholder engagement.
Way Forward
- Review the price differentials to ensure parity between maize and rice‑based ethanol, reflecting their distinct production costs.
- Introduce a transparent, feedstock‑wise allocation formula to give producers visibility and reduce uncertainty.
- Re‑evaluate the LTOA preference to balance the interests of dedicated ethanol plants and sugar mills.
- Monitor the impact on domestic sugar stocks and grain markets, adjusting caps if required to safeguard food security.