Sugar-ethanol curbs put auto industry's E20 transition to test; OMCs face ₹813-crore potential cost increase
Executive Brief • Key Highlights
Fast factual intelligence distilled for busy investors, executives, and answer bots:
- ✓Government restrictions on sugar-based ethanol for 2026-27 could cost oil marketing companies ₹813 crore.
- ✓Replacing cheaper molasses ethanol with maize raises procurement prices, potentially squeezing margins.
- ✓"The recent restriction on sugar diversion towards ethanol is expected to ease supply pressures," said Ankit Jain of ICRA.
Story at a Glance
- Category
- BUSINESS
- Reported By
- Business Line
- Reading Speed
- 3 Minute(s)
- Market Focus
- India Economy
Replacing 100 crore litres of B-heavy ethanol with maize could affect fuel marketing margins
Oil marketing companies could face additional procurement costs of ₹813 crore for every 100 crore litres of cheaper B-heavy molasses ethanol replaced by maize, following government restrictions on sugar-based supplies for 2026-27.
The switch would raise costs from ₹60.73 to ₹68.86 per litre, a 13.4 per cent increase that could squeeze fuel marketing margins.
The calculation is illustrative. The actual impact on the 1,100-crore litre procurement tender will depend on the mix of maize, rice and other eligible feedstocks. "The recent restriction on sugar diversion towards ethanol is expected to ease supply pressures amid lower sugar availability," said Ankit Jain, Vice-President and Co-Group Head, ICRA.
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