As of November 30, 2023, the ethanol production capacity in India stands at approximately 1380 crore litres. This capacity comprises roughly 875 crore litres from molasses and around 505 crore litres from grains.
The Government of India has actively executed the Ethanol Blended with Petrol (EBP) Programme nationwide. This initiative involves Oil Marketing Companies (OMCs) selling petrol blended with ethanol. Under the EBP Programme, the government aims to achieve a 20% blending of ethanol with petrol by the year 2025.
To reach this target, an estimated 1016 crore litres of ethanol is required specifically for blending by 2025, with the total ethanol demand, including other uses, being 1350 crore litres. Anticipating an 80% efficiency in plant operations, an ethanol-producing capacity of about 1700 crore litres is needed by 2025. The estimation considers the growth of petrol-based vehicles in segments like two-wheelers and passenger vehicles and the projected Motor Spirit (MS) sales.
In an effort to augment the country’s ethanol production capacity to meet the blending targets set by the EBP Programme, the Government has instituted various ethanol interest subvention schemes from July 2018 to April 2022.
These schemes facilitate entrepreneurs in establishing new distilleries (molasses-based, grain-based, and dual-feed based) or expanding existing ones across the nation. The Government bears the interest subvention at a rate of 6% per annum or 50% of the interest charged by banks/financial institutions, whichever is lower, for five years, including a one-year moratorium, on the loans extended.
The installation of new ethanol distilleries or expansion of existing ones has attracted investments exceeding ₹40,000 crore, benefiting both urban and rural areas.
Thanks to effective Government policies, ethanol supply to Oil Marketing Companies (OMCs) has surged more than 13-fold, reaching about 502 crore litres in Ethanol Supply Year (ESY) 2022-23 from 38 crore litres in ESY 2013-14. The blending percentage has also risen from 1.53% in ESY 2013-14 to a targeted 12% in ESY 2022-23.
Ethanol production has significantly improved the cash flows of sugar mills, leading to prompt payment to cane farmers. In the Sugar Season (SS) 2022-23, 98.3% of cane dues were cleared, following 99.9% clearance in the previous SS 2021-22.
Over the last decade, sugar mills have generated revenue exceeding ₹94,000 crore from ethanol sales, contributing substantially to their bottom line.
The production of ethanol has proportionately reduced India’s petrol or crude oil imports, resulting in significant foreign exchange savings. In 2022-23, India saved approximately ₹24,300 crore in foreign exchange due to the production of about 502 crore litres of ethanol, thereby enhancing India’s energy security.
Union Minister of State for Consumer Affairs, Food & Public Distribution, Ms. Sadhvi Niranjan Jyoti provided this information in a written reply today in the Lok Sabha.