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India looks to double ethanol distillation capacity to achieve 20% blending with petrol by 2025

The government hopes to more than double ethanol production capacities in the country, so as to achieve 20 per cent blending with automotive fuels by the year 2025, secretary, Department of Food and Public Distribution, Sudhanshu Pandey, said while briefing the media about ethanol blending with petrol (EBP) programme.

Secretary, DFPD said that as a result of various measures taken to address demand and supply side issues, it is likely that ethanol distillation capacities in the country would be more than doubled by 2025 and we would be able to achieve 20 per cent blending target.

EBP will bring positive impact on country’s economy too, he said, adding that it would promote ethanol as a fuel which is indigenous, non-polluting and virtually inexhaustible and would improve the environment and the eco-system as use of E20 fuel reduces carbon monoxide emission by 30-50 per cent and hydrocarbon by 20 per cent.

To achieve blending targets, the government is encouraging sugar mills and distilleries to enhance their distillation capacities for which financial support like bank loans are provided with interest subvention of up to 6 per cent being borne by the government, he said.

Production of fuel grade ethanol and its supply to OMCs has increased by 5 times between2013-14 and 2018-19. In 2018-19, ethanol production in the country reached a historically high figure of about 1.89 billion litres thereby achieving 5 per cent blending. It is expected that in current ethanol supply year 2020-21, more than 3 billion litres of ethanol is likely to be supplied to OMCs to achieve 8 to 8.5 per cent blending levels, he said, adding that it is also likely that 10 per cent blending target is achieved by 2022.

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He further informed that due to upcoming investment of about Rs41,000 crore in capacity addition / new distilleries, various new employment opportunities will be created in rural areas and strengthen the agricultural economy. Pandey said this would save foreign exchange of more than Rs30,000 crore on account of crude oil import bill and would reduce dependence on imported fossil fuel thereby helping to achieve the goal of Atmanirbhar Bharat in petroleum sector.

He said in the next sugar season 2021-22, about 3.5 million tonnes of sugar is estimated to be diverted and by 2025 about 6 million tonnes of sugar is targeted to be diverted to ethanol, which would solve the problem of excess sugarcane/ sugar and would also help sugar mills in clearing cane price dues of farmers. Pandey said that in the past 3 sugar seasons sugar mills and distilleries generated about Rs22,000 crore revenue from sale of ethanol to OMCs.

Pandey said that about 50 million sugarcane farmers and their families and 5 lakh workers associated with sugar mills and other ancillary activities would be benefitted with this intervention. Sugarcane farmers will get timely payment of sugarcane dues as the realisation from sale of ethanol is much faster than sale of sugar.

It may be noted that India is facing a situation of plenty with surplus sugar, leading to liquidity problem to sugar mills and delayed payments of cane dues. The government is encouraging sugar mills to divert excess sugarcane to ethanol which is blended with petrol.

Secretary, DFPD further briefed that till year 2014, ethanol distillation capacity of molasses-based distilleries was less than 2 billion litres. Supply of ethanol to OMCs was only 380 million litres with blending levels of only 1.53 per cent in ethanol supply year (ESY) 2013-14. However, in past 6 years due to the policy changes made by the government, the capacity of molasse- based distilleries have been doubled and are currently at 4.45 billion litres. Capacity of grain-based distilleries currently stands at about 2.58 billion litres.

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Government, he said, has now increased the ex-mill price of ethanol derived from various feed stocks on the basis of raw material cost and conversion costs. Pandey said to increase production of fuel grade ethanol, the government is also encouraging distilleries to produce ethanol from rice available with FCI and maize.

Government has fixed remunerative price of ethanol from maize and FCI rice. To produce ethanol/alcohol from food grains, more than 16.5 million tonnes of additional food grains would be utilised; this extra consumption of surplus food grains would ultimately benefit the farmers as they will get better price for their produce and assured buyers and thus, will also increase the income of millions of farmers across the country, he added.

Further, Pandey said the government is encouraging the production of hand sanitizers, in view of its use in cheching the spread of the Wuhan virus pandemic. The annual production of hand sanitizer was about 1 million litres per annum and was mainly used in hospitals ptior to the pandemic.  Keeping in view the crucial role of sanitizer in the fight against the pandemic, DFPD coordinated with industry and state governments to encourage industry to produce sanitizers, he pointed out.

He said more than 900 distilleries/independent units have been accorded permission to produce hand sanitizer. Installed capacity for production of hand sanitizer increased substantially to 3 million litres per day.

As on 31 May 2021, around 39 million litres of hand sanitizer has been produced. In view of surplus availability of sanitizer in the country, export of sanitizer has also been allowed earning tremendous amount of goodwill for the country, Pandey added.

The above news was originally posted on

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