India to roll out 20% ethanol-blended fuel by March

MUMBAI (ICIS)–India is set to roll out a 20% ethanol-blended (E20) fuel mandate by March – about nine months ahead of schedule – as there will be enough availability of the environment-friendly additive in the domestic market without endangering sugar production.

• 2.5% price hike for C-heavy molasses to deter feedstock diversion away from sugar
• Rice feedstock prices reduced to boost production
• Auto companies to soon launch 100% ethanol vehicles

For the year ending October 2025, the Indian government has approved on 29 January a 2.5% hike in the procurement price of ethanol made from C-heavy molasses, which contain the least sugar among three types of available sugarcane feedstock. India’s ethanol supply year (ESY) is from November to October.

The price adjustment acts as an incentive for producers to use the C-heavy feedstock to make ethanol, instead of the A and B molasses that typically go into sugar production.

Domestic oil manufacturing companies (OMC) such as Indian Oil Corp (IOC), Hindustan Petroleum Corp Ltd (HPCL) and Bharat Petroleum Corp Ltd (BPCL) will now have to pay a higher price for ethanol made from C-heavy molasses.

The government-determined ethanol price was last revised in November 2022.

Meanwhile, to further encourage ethanol production, the government on17 January 2025 reduced the price of rice feedstock by more than 24% to Rs22.50/kilogram (kg) amid a surplus.

Rice and maize are alternative feedstocks for ethanol production.

This decision has helped to make ethanol produced from rice feedstock more economically viable, Grain Ethanol Manufacturers Association (GEMA) treasurer Abhinav Singal said.

The government had banned the use of rice as feedstock for ethanol production from July 2023 to August 2024. Notwithstanding the lifting of the ban, ethanol producers were still finding rice prices too high to make production economically viable.

“Stability in feed prices will boost ethanol production from rice. The earlier rate was unviable for the units,” Singal said.

Nearly 65% of the ethanol produced in the country is sourced from sugarcane while the remaining 35% comes from grains, including maize and rice.

India will achieve 20% blending of ethanol in gasoline in the next two months and will soon be able to blend more than 20% ethanol in gasoline if the need arises, India’s petroleum and natural gas minister Hardeep Singh Puri said at the Auto Expo 2025 on 21 January.

In 2023-24, there was a phased roll-out of 20% ethanol in select outlets across the country, with full implementation initially targeted by 2030.

The target full implementation was brought forward to 2025-26 as ethanol availability is now assured following a series of measures taken over the past two years, industry sources said.

“We have increased ethanol blending in fuel from 1.5% per cent in 2014 to 10% in May 2022, which was well ahead of the November 2022 deadline and now the target of 20% blending has also moved forward significantly,” he added.

“Our current distillation capacity, which is at about 16.83 billion litres, is projected to cross 17 billion litres, and will leave us with ample opportunity to blend beyond 20%,” he added.

India achieved ethanol blending of 18.2% in gasoline in December 2024, official data show.

The government is currently working on a plan to bring down retail prices of ethanol for use as fuel in vehicles with flexible fuel engines, India’s road transport and highways minister Nitin Gadkari said at the Sugar-Ethanol and Bio Energy India Conference on 30 January.

Around nine companies in India will soon be launching cars and two-wheelers that run on 100% ethanol, he added.

Major automobile manufacturers, including Mahindra & Mahindra, Toyota, Hyundai, and Tata, will introduce 100% ethanol-powered vehicles over the next five months, with two-wheeler makers also adopting the technology, he said.

Focus article by Priya Jestin

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