The government on Monday permitted sugar mills and distilleries to produce ethanol without any quantitative restrictions in the 2025-26 marketing year starting in November. Ethanol Supply Year (ESY) runs from November to October.
"Sugar mills and distilleries are allowed to produce ethanol from sugarcane juice/sugar syrup, B-heavy molasses as well as C-heavy molasses during ESY 2025-26 without any restrictions," the food ministry said in a notification.
It said the department in consultation with the petroleum ministry would periodically review the diversion of sugar to ethanol production in order to ensure a smooth supply of sweetener in the domestic market.
During the current ESY 2024-25, the government has permitted the diversion of 40 lakh tonnes of sugar for ethanol production.
The Centre has been promoting blending of ethanol in petrol under the Ethanol Blended Petrol (EBP) programme. Public Sector Oil Marketing Companies (OMCs) sell ethanol blended with petrol.
During the ongoing ESY 2024-25, OMCs have achieved an average ethanol blending of 19.05% as on July 31, 2025.
The National Policy on Biofuels 2018, as amended in 2022, inter alia advanced the target of 20% blending of ethanol in petrol from 2030 to ESY 2025-26.
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