India’s ethanol blending programme follows two-decade plan with capacity expansion

Initially, India targeted 5 percent ethanol blending across ten states and Union Territories, however blending levels remained around 1.5 percent until 2014 due to limited production capacity rather than lack of acceptance of ethanol as a fuel. The Ministry explained that ethanol production was primarily dependent on sugarcane, a seasonal crop with an annual production capacity of approximately 400 crore litres, insufficient to higher blending targets.

The approach changed significantly following the launch of the National Policy on Biofuels in might 2018, which aimed to establish an ecological stability supporting extensive ethanol production. Multiple departments and ministries collaborated to expand feedstock availability, infrastructure, logistics, and investment.

In August 2021, general sector oil marketing companies Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) issued Expressions of Interest to setting up dedicated ethanol vegetation in ethanol-deficit regions. The Ministry stated these projects offered investors prolonged purchase agreements, tripartite financing arrangements with general sector banks via escrow mechanisms, and guaranteed ethanol procurement exclusively to the Ethanol Blended Petrol Programme. However, such vegetation require nearly two years to have become operational.

The Ministry referred to the June 2021 roadmap released by NITI Aayog, formulated after consultations with automobile manufacturers, oil companies, agricultural experts, and other stakeholders. The roadmap emphasised ethanol’s role in reducing environmental impact, enhancing energy security, and supporting rural incomes.

India’s estimated annual ethanol requirement to achieving 10 percent blending was approximately 500-600 crore litres. With new investments and expanded capacity, ethanol production is expected to reach nearly 1,200 crore litres, making the 20 percent blending target attainable.

Addressing comparisons with Brazil, the Ministry noted that Brazil spent decades building the world’s first extensive ethanol ecological stability, whereas India benefits from global experience, established technologies, and improved stakeholder coordination. The Ministry described India’s ethanol journey as “carefully planned, staggered and stepwise,” involving consultations with automobile manufacturers, testing agencies, oil marketing companies, and other stakeholders prior to implementation.