India Achieves 20% Ethanol Blending in Petrol Five Years Ahead of Schedule: A Milestone in Clean Energy and Rural Prosperity

New Delhi: India has marked a historic milestone in its journey toward energy independence and sustainable development by achieving 20% ethanol blending in petrol in 2025, five years ahead of the original 2030 target. This monumental achievement, announced by Union Petroleum and Natural Gas Minister Hardeep Singh Puri and celebrated by the Indian Sugar & Bio-energy Manufacturers Association (ISMA), underscores India’s commitment to clean energy, reduced fossil fuel dependency, and rural economic empowerment.

Background of the Ethanol Blended Petrol (EBP) Programme

Launched in 2003, the Ethanol Blended Petrol (EBP) Programme aimed to reduce India’s reliance on imported crude oil, promote renewable energy, and bolster the agricultural sector. Ethanol, a renewable fuel derived from biomass such as sugarcane, maize, wheat, and other starch-rich crops, is produced through the fermentation of sugars by yeasts or petrochemical processes like ethylene hydration. The programme gained significant momentum under Prime Minister Narendra Modi’s administration, with the National Policy on Biofuels (2018), amended in 2022, accelerating the target for 20% ethanol blending in petrol from 2030 to 2025-26.

The policy expanded the scope of raw materials for ethanol production, allowing the use of sugarcane juice, sugar beet, cassava, damaged food grains, and rotten potatoes unfit for human consumption. Additionally, it permitted the use of surplus food grains during bumper harvests, ensuring fair prices for farmers and stabilizing agricultural markets. This strategic alignment of energy and agricultural goals has been pivotal in transforming India’s biofuel landscape.

Remarkable Growth in Ethanol Production

The EBP Programme has witnessed exponential growth since its inception. In 2014, ethanol blending stood at a modest 1.5%, with production at 38 crore litres. By June 2025, ethanol production had surged to an impressive 661.1 crore litres, achieving a nearly 13-fold increase in blending rates over 11 years. This dramatic rise reflects the government’s proactive policies and the sugar industry’s pivotal role in supplying biofuel derived from sugarcane juice, B-heavy molasses, and other agricultural by-products.

According to ISMA, this achievement has positioned India as a global leader in biofuel adoption, demonstrating the potential of renewable energy to drive economic and environmental progress. “This achievement is a monumental leap for India’s energy independence and rural prosperity,” said Deepak Ballani, Director General of ISMA. “The government’s unwavering policy direction and visionary leadership have not only made this national success possible five years ahead of schedule but have also set a powerful precedent for our collective future in green energy.”

Economic Benefits: Savings, Farmer Incomes, and Industry Growth

The ethanol blending initiative has delivered substantial economic benefits, transforming India’s energy and agricultural sectors. By reducing dependency on imported crude oil, India has saved approximately ₹1.36 lakh crore in foreign exchange, bolstering its economic resilience. This reduction in oil imports aligns with the nation’s goal of achieving energy security and mitigating the volatility of global oil markets.

The programme has also been a boon for India’s agricultural economy. Farmers have received ₹1.18 lakh crore for supplying raw materials such as sugarcane, maize, and other crops for ethanol production. This financial influx has enhanced rural incomes, empowering farmers and strengthening the agricultural backbone of the nation. Additionally, distilleries have earned ₹1.96 lakh crore, fueling the growth of the domestic biofuel industry and creating employment opportunities in rural areas.

The Union Cabinet’s recent approval of a price hike for ethanol produced from molasses for the Ethanol Supply Year (ESY) 2024-25 (November 1, 2024, to October 31, 2025) further incentivizes production. This decision ensures that Public Sector Oil Marketing Companies (OMCs) procure ethanol at revised, remunerative prices, providing stability to farmers and distilleries while encouraging continued investment in ethanol infrastructure.

Environmental Impact: A Leap Toward Climate Goals

The environmental benefits of the EBP Programme are equally significant. The shift to 20% ethanol-blended petrol has reduced carbon dioxide emissions by 698 lakh tonnes, contributing directly to India’s climate commitments under the Paris Agreement. This reduction aligns with the nation’s ambitious target of achieving net-zero emissions by 2070, reinforcing its role as a global leader in sustainable development.

Ethanol, derived primarily from sugarcane, is a cleaner-burning fuel compared to traditional fossil fuels. Its adoption has improved air quality in urban centers and promoted sustainable agriculture by utilizing crop residues and by-products. By integrating renewable energy into its fuel mix, India is not only reducing greenhouse gas emissions but also setting a model for other nations to follow in the global fight against climate change.

Policy Measures Driving Success

Several policy interventions have been instrumental in achieving the 20% ethanol blending target ahead of schedule. Key measures include:

1. Interest Subvention Scheme (2018): This scheme enhanced ethanol production capacity by providing financial incentives to distilleries, enabling them to scale up operations and meet growing demand.
2. GST Reduction (2018): The Goods and Services Tax (GST) on ethanol was lowered from 18% to 5%, making ethanol production more economically viable and encouraging investment in the sector.
3. New Raw Materials (2019): The introduction of sugar and sugar syrup as sources for ethanol production, with fixed remunerative prices, expanded the raw material base and ensured a steady supply for distilleries.
4. Amendment to the Industries (Development and Regulation) Act (2016): This clarified the roles of central and state governments in ensuring a continuous supply of ethanol for blending, streamlining coordination and implementation.
5. Approval for Maize Use (2020): The National Biofuels Coordination Committee (NBCC) approved the use of maize for ethanol production, diversifying the raw material base and supporting farmers growing this crop.

These measures, combined with visionary leadership and robust policy frameworks, have created an ecosystem conducive to the rapid expansion of ethanol blending in India.

The Role of the Sugar Industry

The sugar industry has been the backbone of India’s ethanol economy, leveraging sugarcane as the primary raw material for biofuel production. Sugarcane juice, B-heavy molasses, and other by-products have been critical in meeting the rising demand for ethanol. The industry’s ability to adapt and scale production has been instrumental in achieving the 20% blending target, while also providing economic stability to millions of sugarcane farmers across the country.

ISMA highlights the sugar industry’s role in driving rural prosperity, noting that the ethanol programme has created a symbiotic relationship between agriculture and energy. By utilizing agricultural by-products and surplus crops, the initiative ensures that farmers benefit from stable incomes, even during periods of oversupply.

Future Prospects and Global Leadership

India’s early achievement of the 20% ethanol blending target sets a powerful precedent for its future in green energy. The success of the EBP Programme demonstrates the potential of biofuels to address energy security, environmental sustainability, and rural development simultaneously. With strong policy support, infrastructure expansion, and farmer participation, India is well-positioned to lead the global biofuel revolution.

The government’s focus on expanding ethanol production capacity, diversifying raw materials, and incentivizing the biofuel industry signals a bright future for renewable energy in India. The programme’s alignment with national priorities, such as reducing fossil fuel imports and achieving climate goals, underscores its strategic importance.

Conclusion

India’s achievement of 20% ethanol blending in petrol five years ahead of schedule is a testament to the power of visionary leadership, robust policy frameworks, and collaborative efforts between the government, industry, and farmers. From a modest 1.5% blending rate in 2014 to 20% in 2025, this 13-fold increase has delivered transformative economic, environmental, and social benefits. With ₹1.36 lakh crore saved in foreign exchange, ₹1.18 lakh crore paid to farmers, ₹1.96 lakh crore earned by distilleries, and 698 lakh tonnes of CO₂ emissions reduced, the Ethanol Blended Petrol Programme stands as a model of sustainable development.

As India continues to innovate and expand its biofuel initiatives, it is poised to become a global leader in clean energy, setting an example for other nations to follow. This milestone not only strengthens India’s energy security but also empowers its rural communities, paving the way for a greener, more prosperous future.

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