The Centre’s decision to suspend ethanol procurement from B-heavy molasses, sugar syrup and sugarcane juice for one year has put sugar mills and related projects under pressure, while allowing production from C-heavy molasses to continue during the 2026-27 ethanol year.
The restriction will apply from 1 November 2026 to 31 October 2027. The decision has been taken to maintain adequate sugar availability in the country and protect sugar stocks, according to the report by Lokmat. Ethanol production from sugarcane juice, syrup and B-heavy molasses will remain suspended for the period, unless the government reviews the decision after sugar availability improves.
The change will sharply alter the composition of ethanol made from sugar. During the previous year, ethanol produced from sugar accounted for 28% of total ethanol production. Of the 282 crore litres produced from sugar-based feedstock, around 50% came from B-heavy molasses, approximately 40% from syrup and sugarcane juice, and 10% from C-heavy molasses.
Under the new arrangement, only C-heavy molasses can be used for ethanol production from sugar-related feedstock. This means the share of ethanol made from sugar-based sources is expected to fall from 28% to around 2%, according to the figures cited in the report.
The policy change comes as the Centre has issued a new tender for 1,110 crore litres of ethanol for the current cycle. The tender, issued on Friday, 16 October, is 50 crore litres higher than the previous year’s volume. However, sugar mills that invested specifically in B-heavy molasses or syrup-based ethanol capacity will not be able to rely on those feedstocks for procurement during the one-year period.
The report states that around five to six sugar factories across the country could be directly affected because they depend entirely on B-heavy molasses or syrup-based ethanol production. Two to three such factories are located in Karnataka, while one is in Maharashtra. The projects and facilities associated with these mills represent an estimated investment of about ₹1,000 crore, according to experts cited by Lokmat.
One of the affected factories is associated with former Maharashtra minister Rajesh Tope, the report said. The restriction therefore has implications not only for ethanol output but also for the use of recently created industrial capacity at sugar mills that shifted towards higher-value feedstocks under the biofuel policy.
The biofuel policy was introduced to support sugarcane growers and improve returns for the sugar industry. The present decision reflects a change in the immediate policy priority, with sugar availability and stock levels taking precedence over ethanol production from feedstocks that divert more sugar content away from crystallised sugar production.
Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories in New Delhi, said the suspension had been imposed for the current year after considering the expected availability of sugar. He said the restriction could be lifted if sugar availability improves.
For sugar mills, the immediate operational change will be the shift towards C-heavy molasses for ethanol production. The Centre’s 1,110-crore-litre tender remains the next procurement milestone, while the suspension of the other feedstocks is scheduled to remain in force until 31 October 2027.
