India’s ethanol industry has experienced growth in recent years, yet domestic
consumption exceeded production for the ninth consecutive year in 2023. The nation’s
current industrial ethanol production capacity stands at 13.80 billion liters, with molasses and
grain feedstocks contributing 8.75 billion liters and 5.05 billion liters, respectively. In its
pursuit of 20% ethanol blending by 2025, India achieved a blending record of 11.6% in the
first quarter of the ethanol supply year 2023, marking a 13% increase compared to 2022.
Maharashtra is India’s leading ethanol producer, with an annual output of 2.68 billion liters.
Uttar Pradesh and Karnataka follow closely, producing 2.08 billion and 1.18 billion liters
respectively. These states dominate industrial ethanol production due to their abundant
feedstock resources.
India advocates for increased maize cultivation due to its multiple benefits. Its suitability as an
ethanol feedstock, combined with higher market prices for farmers and superior agricultural
yields, makes it an attractive crop. A projected ten-million-metric-ton increase in maize
production over the next five years will facilitate greater ethanol conversion.
Target Achievement Data
Oil companies surpassed the 10% ethanol blending target in June 2022, five months ahead of
schedule for the 2021-22 ethanol supply year. This momentum continued, with ethanol
blending exceeding 5 billion liters in the following year, pushing the blending percentage to
12.06%. The current 2023-24 ethanol supply year has seen this figure climb beyond 13%.
To achieve the 20% ethanol blending target by 2025, approximately 10.16 billion liters of
ethanol are necessary, with total ethanol demand, including other uses, reaching 13.50 billion
liters. Considering an 80% plant efficiency, an ethanol production capacity of about 17
billion liters must be established by 2025.
India’s bioethanol production capacity reached approximately 13.80 billion liters as of
November 30, 2023. Of this, molasses-based production accounted for around 8.75 billion liters,
while grain-based production contributed about 5.05 billion liters.
India’s total non-potable ethanol consumption is projected to increase by 13% in 2024,
reaching 7.2 billion liters. Fuel ethanol remains the primary consumer since 2019, with an
estimated consumption of 6.2 billion liters this year. The government’s push for E-20
blending by 2025 drives fuel ethanol demand. While India achieved a 12% blending rate in
October 2023, feedstock constraints and low sugar production hinder maintaining this rate in 2024.
Production Data
To achieve the E-20 blending target by 2025, the Indian government is promoting increased
maize cultivation. The Department of Food and Public Distribution (DFPD) has authorized
organizations like NAFED (National Agricultural Cooperative Marketing Federation of India),
NCCF (National Cooperative Consumers Federation), and PACs (Primary Agricultural
societies) to procure maize from farmers at the Minimum Support Price (MSP). This procured
grain will then be supplied to Oil Marketing Companies (OMCs) to fulfill the ethanol blending
mandate.
By offering procured maize to distilleries at the Minimum Support Price (MSP) and assuming
all associated costs, the government demonstrates a strategic approach to bolstering both the
ethanol industry and food security. This initiative is anticipated to stimulate maize production
within India, encouraging farmers to redirect their crops towards ethanol fuel. Current maize
production is estimated at 35.5 million metric tons for the ongoing marketing year, with
projections of reaching 37 million metric tons in the following year.
For the 2023-2024 ethanol supply year (ESY), Oil Marketing Companies (OMCs) issued
tenders for 8.25 billion liters (BL) of ethanol. The first two tender rounds garnered bids
totaling 5.62 BL, representing about 70% of the tendered volume. Of this, the sugarcane
industry accounted for approximately 2.69 BL, while the remaining 2.92 BL was sourced from
grains. As of April 2024, only 2.11 BL of ethanol was contracted against the required 8.25 BL,
marking a nearly 58% decrease compared to the previous year’s ethanol contracts.
Due to anticipated declines in sugarcane production and dwindling rice grain supplies, there is a forecast of two percent reduction in India’s ethanol production for 2024, reaching 6.35 billion liters.