India's Ethanol Push Promises Rs 35,000 Crore for Farmers Annually

The Indian government expects that achieving 20 percent ethanol blending in petrol will result in payment of more than Rs 35,000 Crores annually to farmers, Suresh Gopi, the Minister of state for petroleum and natural gas stated in a written reply to the Lok Sabha.

Public Sector Oil Marketing Companies (OMCs) have achieved the target of 10 per cent ethanol blending in petrol in June, 2022, five months ahead of the target set for the 2021-22 Ethanol Supply Year (ESY). The blending of ethanol further increased to 12.06 percent in ESY 2022-23 and approx. 14.6 percent during ESY 2023-24.  During the last ten years, ethanol blending in petrol by Public Sector OMCs has resulted in approximate savings of more than Rs 1,08,655 Crores of foreign exchange as on 30th September, 2024.

Ethanol production, primarily from sugar-based feedstock aided in reducing excess sugar inventory for sugar factories and generating revenue early to clear the dues of cane farmers. During the last ten years, Ethanol Blended Petrol (EBP) Programme cleared payment of approximately Rs 92,409 Crores to the farmers as on 30.09.2024. 

The Indian government had initiated the EBP Programme in 2003 to promote the blending of ethanol in petrol, reducing dependence on fossil fuels. This move is especially significant in light of India’s sustainability goals for 2030.

Read More: Ethanol can Fuel Sustainable Change

Biofuel Production in India

India has emerged as one of the fastest-growing consumers of biofuels globally, accelerating ethanol blending over the years. Ethanol, a key biofuel, helps reduce dependence on fossil fuels curbing carbon emissions and air pollution.

India’s ethanol blending programme has experienced a significant growth considering the rise in blending rate from 1.53 percent in 2013-14 to 10.17 percent by 2022. Having achieved its 10 percent ethanol blending target, also known as E10, five months ahead of schedule in June 2022, India now aims to achieve a 20 percent blend, or E20, by the end of 2025.

Various policy initiatives and amendments like the National Policy on Biofuels (NPB) 2018 have bolstered this rise in blending rate. The introduction of the Pradhan Mantri JI-VAN Yojana in March 2019 further helped by providing the necessary financial support for integrated bio-ethanol plants and announcing measures to fix ethanol prices based on raw material costs.