Ethanol blending hindered by low rates and policy changes

India’s ambitious plans to increase ethanol blending with petrol have hit a roadblock as the blending ratio remains stagnant at 12.1 per cent six months into the latest ethanol supply season. This lack of progress threatens to derail the country’s target of achieving a 20 per cent ethanol-blended petrol (EBP) by 2025-26, leading to increased dependence on polluting fossil fuel imports.

The main issue lies in the pricing of ethanol, with industry players calling for an increase in procurement prices to incentivize production. The Indian Sugar and Bio-Energy Manufacturers Association (Isma) has highlighted the need for revised pricing structures to reflect production costs and encourage investments in new distilleries.

Without adequate pricing adjustments, major industry players are reconsidering their investment plans, exacerbating the shortfall in ethanol production capacity. Analysts estimate a 6.2 billion litre shortfall in ethanol production capacity, further underscoring the urgency for policy interventions and farmer support.

Despite the challenges, industry leaders remain hopeful that the government will address feedstock and profitability issues in the coming years to meet the EBP targets. However, weather uncertainties and lower crop yields continue to pose a threat to India’s ethanol plans, highlighting the need for better agricultural management and increased cane production to meet growing demand.

As the country navigates these challenges, stakeholders emphasize the importance of stable policies and investments in sugarcane production to achieve the desired ethanol blending targets and reduce reliance on imported fossil fuels.