New Delhi, (January 29, 2025 04:34 pm) – The Union Cabinet has increased the ex-mill price for ethanol derived from C heavy molasses by Rs.1.69 per litre for the 2024-25 period, which would end on 31st October 2025. The revised price for ethanol derived from C heavy molasses is now Rs. 57.97 per litre.
But the prices for ethanol derived from B heavy molasses and from sugarcane juice/ sugar/ sugar syrup are not changed. They remain at Rs. 60.73 per litre and Rs. 65.61 per litre, respectively.
The Union government has also shifted the target of 20 percent ethanol blending in petrol to ethanol year 2025-26 from the previous target of 2030. This development portends well for India’s biofuel segment.
This move is part of the broader Ethanol Blended Petrol (EBP) program, which was launched to reduce India’s dependence on crude oil imports and cut carbon emissions from the transport sector. The EBP program also provides an alternative revenue stream for the sugar industry, which often faces issues of surplus production and pricing volatility.
Ethanol Blending: India’s Strategy for Energy Security
India’s ethanol blending initiative is a crucial component of its energy transition strategy. By increasing the share of ethanol in petrol, the country aims to:
- Reduce Import Dependency – India imports over 85% of its crude oil needs. Blending ethanol with petrol reduces the import burden and saves valuable foreign exchange.
- Cut Carbon Emissions – Ethanol is a cleaner-burning fuel compared to petrol, contributing to lower greenhouse gas emissions.
- Enhance Farmers’ Income – With higher demand for ethanol, sugarcane farmers benefit from assured procurement and better prices for their produce.
- Support Industrial Growth – The ethanol industry has witnessed significant growth in recent years, with increasing investments in distilleries and biofuel production units.
The government has been steadily increasing ethanol procurement prices to attract more investments and ensure steady ethanol supply. This latest hike in the price of ethanol from C heavy molasses is part of this larger policy framework.
Advancing the 20% Ethanol Blending Target
The decision to achieve the 20% ethanol blending target by 2025-26 instead of 2030 underscores the government’s commitment to energy self-reliance and sustainable fuel solutions. The faster rollout of the E20 fuel (20% ethanol-blended petrol) will require ramping up ethanol production capacity and optimizing supply chain logistics.
The ethanol blending percentage in India has already crossed 12%, a significant rise from just 1-2% a decade ago. The early achievement of the 10% blending target in 2022 encouraged policymakers to expedite the 20% target timeline.
Industry Response and Challenges
Industry stakeholders have welcomed the government’s decision, seeing it as a positive step towards strengthening the ethanol ecosystem in India. Sugar mills, distilleries, and biofuel companies are expected to benefit from increased ethanol demand and better pricing.
However, certain challenges remain:
- Raw Material Availability – Ethanol production relies heavily on sugarcane, and fluctuations in sugarcane output due to weather conditions could impact supply stability.
- Infrastructure Development – The expansion of ethanol blending requires significant investment in production facilities, storage, and transportation infrastructure.
- Technological Adaptation – Automakers need to ensure that vehicles are compatible with higher ethanol blends, which may require design modifications and fuel system adjustments.
Despite these challenges, the government has been actively addressing industry concerns by providing financial incentives, facilitating loans for ethanol production units, and streamlining regulatory approvals.
Conclusion
The increase in ethanol prices from C heavy molasses and the acceleration of the ethanol blending target highlight India’s proactive approach to energy security and environmental sustainability. By fostering a robust ethanol industry, the government not only supports sugarcane farmers and distilleries but also reduces the nation’s dependence on fossil fuels.
As the country progresses towards the E20 target, further investments in ethanol infrastructure, supply chain efficiency, and technological innovations will be crucial. The bioenergy sector stands to gain significantly from these policy measures, positioning India as a global leader in the green fuel transition.
