India Crosses 20% Ethanol Blending Milestone Ahead of Schedule

India has surpassed its 20% ethanol blending target for petrol in 2025, achieving the landmark five years ahead of schedule. The feat reflects rapid capacity growth and a major policy achievement under the country’s biofuel drive.

Since the launch of the Ethanol Blended Petrol (EBP) programme in 2003, over ₹40,000 crore has been invested in ethanol capacity, resulting in a 140% increase in output. The initiative has also provided crucial new revenue streams for sugar mills and maize farmers.

Blending has jumped from just 1.5% in 2014 to 20% in 2025, helping cut India’s dependence on oil imports while boosting rural incomes.

Shifting to Grain, but Sugar Mills Under Pressure

Grain-based ethanol now dominates the mix, accounting for nearly 72% of production, while sugarcane’s share has fallen to 27%. The shift reflects rising grain availability and new distillery investments.

However, sugar mills are increasingly under strain. Industry leaders — including the National Cooperative Sugar Factories Association — argue that procurement prices offered by oil marketing companies (OMCs) do not reflect higher Fair and Remunerative Prices (FRP) set for sugarcane.

As a result, many mills prefer to sell sugar directly at better margins. This year, only 32 out of a potential 40 lakh metric tonnes of sugar are likely to be diverted to ethanol, leaving much of the installed capacity underutilised.

Climate Gains and Policy Recommendations

According to NITI Aayog’s emissions study, sugarcane-based ethanol emits 65% less greenhouse gases than petrol, while maize-based ethanol reduces emissions by 50%. This provides strong climate benefits alongside economic ones.

The ethanol push has largely eliminated cane payment arrears, improved maize cultivation, and revitalised rural economies.

Experts from the Indian Sugar Mills Association (ISMA) are calling for a dynamic pricing formula linked to FRP and inflation. Such a mechanism, they argue, would enable mills to invest confidently in new capacity and fully realise India’s blending potential.