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In an order issued on August 29, the Union government has lifted the cap on producing ethanol from sugarcane-related products. All sugar mills and distilleries have been granted permission to produce ethanol from sugarcane juice or sugar syrup and B-heavy and C-heavy molasses for the ethanol supply year (ESY) 2024-25.
Additionally, another order stated that ethanol distilleries can participate in the Food Corporation of India’s (FCI) rice auctions. Under this order, these distilleries will be allowed to purchase rice at the final fixed price through e-auction from August to October 2024 for ethanol production.
Distilleries will be able to procure a maximum of 2.3 million tonnes of rice from FCI stocks for ethanol production. Ethanol producers can use this rice as feedstock, which is a crucial raw material for ethanol production.
The Union government has set a target to increase the ethanol blending rate in petrol to 20 per cent by 2025, up from the current 13 per cent. Consequently, ethanol production is being continuously encouraged.
The order issued on August 29 also mentioned about a periodic review of the diversion of sugar for ethanol production in collaboration with the Union Ministry of Petroleum and Natural Gas to ensure that sugar availability remains consistent throughout the year.
Last year, a cap was imposed on the diversion of sugar for ethanol production due to concerns about a potential decrease in sugar production and a possible rise in sugar prices. Additionally, considering the rising rice prices, the government had also imposed a cap on using rice from FCI stocks for ethanol production.
According to a press release dated December 20, 2023, the ethanol production capacity in the country was approximately 13.80 billion litres as of November 30, 2023, with about 8.75 billion litres being molasses-based and approximately 5.05 billion litres being grain-based.
The Indian government is implementing an Ethanol Blending Program (EBP) across the country, under which oil marketing companies (OMCs) sell petrol blended with ethanol. Under the EBP program, the government has set a target to achieve a 20 per cent ethanol blending in petrol by 2025.
According to the press release, to meet the 20 per cent blending target by 2025, approximately 10.16 billion litres of ethanol will be required, with a total ethanol demand of 13.50 billion litres including other uses. To meet this, an ethanol production capacity of around 17.00 billion litres will be needed by 2025, assuming plants operate at 80 per cent efficiency.
The government has estimated the demand for ethanol required for a 20 per cent blending target by 2025, taking into account the growth of petrol-based vehicles in the two-wheeler and passenger vehicle segments and the projected sales of motor spirit (MS).