Over 350 Distilleries Face Uncertainty Over Ethanol Tender Allocation: Industry Raises Alarm
NEW DELHI: More than 350 operational distilleries across India are facing uncertainty after receiving inadequate procurement orders under the latest ethanol tender, with industry bodies alleging that the new allocation method unfairly benefits new entrants while sidelining established producers.
The tender for the Ethanol Supply Year (ESY) 2025–26, issued by Oil Marketing Companies (OMCs), has drawn criticism from stakeholders who say the allocation criteria have created artificial imbalances and undermined distilleries developed under previous government policies.
According to the tender document (#1000442332), zones where local distilleries’ offers fall short of requirements are classified as “deficit zones,” with all local offers automatically considered in full for allocation.
However, industry representatives argue that this framework ignores the surplus capacity available in neighbouring states — much of it established under Long-Term Offtake Agreements (LTOA) and Expressions of Interest (EOI) previously promoted by OMCs.
“A more holistic procurement model is needed — one that takes into account surplus capacity across states, prior investments, and commitments made under earlier government programmes,” said Grain Ethanol Manufacturers Association (GEMA) President C. K. Jain.
Jain added that the current system is both economically inefficient and environmentally counterproductive, as it encourages redundant capacity creation while leaving existing infrastructure underutilized.
Many distilleries, industry stakeholders say, had expanded production based on government assurances under the Ethanol Blended Petrol (EBP) programme — a key initiative aimed at cutting fossil fuel imports and supporting farmers through sugarcane and grain procurement.
While the EBP programme has made strong progress toward achieving 20 per cent ethanol blending in petrol, experts warn that inequitable allocation could jeopardize the long-term stability of the sector.
Preliminary data from the tender indicates that at least 350 distilleries have been denied adequate orders, prompting concerns over the transparency and fairness of the procurement process.
Industry associations are now urging the government to intervene and ensure optimal use of existing operational capacity before encouraging new investments in deficit regions.
The ethanol programme was originally designed to address regional supply gaps through localized production, lower transport costs, and bolster rural incomes — but stakeholders argue that the current tendering approach risks distorting those goals.
