New Delhi, Oct. 19 -- The government has decided to procure mostly grain-based ethanol for its petrol blending programme this year, as it seeks to prevent the diversion of sugarcane and boost sugar production at a time when acreage has declined, raising concerns about price rise.

State-run oil marketing companies have excluded ethanol produced from sugarcane juice, sugar syrup and B-heavy molasses from their latest procurement tender for the 2026-27 supply year for petrol blending, prompting sugar mills to urge the government to retain these feedstocks in future procurement cycles. The mills warn that a prolonged exclusion could strain their finances when sugar production rises and prices fall sharply.

The tender, issued on 16 October b...