India May Soon Use Ethanol for Cooking as Centre Prepares New Policy

The Ministry of Petroleum and Natural Gas is preparing a policy framework to introduce ethanol as a mainstream household cooking fuel, a move aimed at reducing India's dependence on liquefied petroleum gas (LPG) and strengthening the country's clean energy transition, according to a report by The Economic Times.

The proposed framework is expected to address key issues such as subsidies, fuel distribution infrastructure and supply chain development. Industry associations representing fuel suppliers are also holding parallel consultations with the government as the policy takes shape.

According to the report, citing a source, the policy could be finalised as early as September.

Ethanol to Complement LPG

The initiative is intended to position ethanol as an alternative clean cooking fuel rather than a replacement for LPG.

The report said the government is also evaluating financial incentives to accelerate adoption. These could include either a one-time capital subsidy for ethanol-based cooking systems or an ongoing fiscal support mechanism.

"To promote ethanol cooking, the government may roll out some sort of a subsidy scheme too that would be capital-driven or an ongoing fiscal commitment," The Economic Times reported, citing another industry source.

Surplus Ethanol Creates New Opportunity

India's growing ethanol production capacity is one of the primary drivers behind the proposed policy.

According to a CareEdge Ratings report released in May, the country's ethanol production capacity has crossed 20 billion litres annually, with another 4 billion litres expected to become operational during the current financial year.

Of this, around 11 billion litres are consumed under the government's E20 petrol blending programme, while the liquor, pharmaceutical and chemical industries together account for another 3-3.5 billion litres.

This leaves nearly 7 billion litres of surplus production capacity, creating an opportunity to expand ethanol's use beyond transportation fuels.

The excess supply could also support ethanol exports to neighbouring countries such as Nepal, Bangladesh and Indonesia, where ethanol blending targets exist but domestic production remains limited.

Distribution Network Under Consideration

State-run oil marketing companies (OMCs) are also exploring ways to build the required ecosystem for ethanol-based cooking.

According to the report, OMCs have been conducting research on ethanol-powered cooking stoves and are evaluating partnerships or acquisitions involving existing ethanol cooking technologies.

The government is also considering setting up ethanol automated teller machines (ATMs) at fuel stations, allowing households to refill ethanol canisters used in cooking stoves through the existing retail fuel network.

Reducing LPG Import Dependence

The proposed policy comes as India seeks to strengthen its energy security following recent geopolitical disruptions.

Although the country has diversified its LPG procurement since tensions in West Asia escalated earlier this year, it continues to rely heavily on imports from Gulf nations, with a significant share transported through the Strait of Hormuz.

The government has already directed state-run oil marketing companies to develop a strategic LPG storage plan capable of maintaining nearly 30 days of reserves to reduce supply risks.

The broader shift towards cleaner cooking fuels could also generate significant fiscal savings.

According to a February report by the International Institute for Sustainable Development (IISD), transitioning to electric cooking and biogas could help India save more than ₹2 lakh crore (around $24 billion) in cumulative LPG subsidies by 2050.