Indian Sugar and Bio-Energy Manufacturers Association (ISMA) has appealed to the government to uphold current restrictions on fuel ethanol imports, cautioning that lifting these limits could threaten the country’s energy security and its strides toward green fuel self-sufficiency. Since 2018, the domestic ethanol sector has attracted over ₹40,000 crore in investment and experienced a remarkable 140% growth in production. This surge has enabled India to achieve a 19% ethanol blending rate—nearly reaching the 20% goal well ahead of schedule. ISMA emphasizes that maintaining import protections is essential for ensuring policy consistency, protecting investments, supporting farmers, and fostering rural development.
The Indian Sugar and Bio-energy Manufacturers Association (ISMA) has raised strong objections to the proposed discussions on permitting ethanol imports under the India-US trade framework, arguing that such a move would disrupt fair and remunerative price (FRP) payments to sugarcane farmers and result in underutilisation of domestic ethanol production capacity.
In its communication to Commerce Minister Piyush Goyal, the industry flagged concerns over the possible removal of restrictions on ethanol imports for fuel blending, cautioning that it could disrupt farmer payment cycles, as ethanol prices are directly linked to the fair and remunerative price (FRP) of sugarcane, ISMA stated. This comes amid ongoing trade negotiations between India and the United States, where the US is pushing for market access for ethanol, largely produced from grains.
ISMA highlighted that allowing ethanol imports would undermine gains in domestic capacity building, investments, and job creation.
In a letter to Commerce Minister Piyush Goyal, ISMA Director General Deepak Ballani urged the government to retain existing restrictions on fuel ethanol imports for blending and to keep promoting domestic ethanol production. He requested the government to reassure stakeholders on “policy stability,” to foster continued investment and support farmer-focused growth. He further stated that the Ethanol Blending Programme has evolved beyond an energy initiative, becoming a model for inclusive rural development that supports and empowers over 55 million sugarcane farmers and their families.
The Association pointed out that over ₹40,000 crore has been invested in India’s ethanol sector since 2018, during which domestic ethanol production capacity has expanded by more than 140%. Allowing such imports would dilute these gains and hinder self-reliance in ethanol production.
India’s ethanol blending in petrol has already reached 19%, with the government targeting 20% blending by the 2024-25 supply year ending in October—one year ahead of schedule. ISMA attributed this progress to supportive government policies, including restrictions on fuel ethanol imports. The National Policy on Biofuels (2018) and the Directorate General of Foreign Trade (DGFT) notification dated August 21, 2018, which classified ethanol imports for fuel as ‘restricted,’ were cited by ISMA as critical measures in establishing a self-reliant ethanol economy in India.
ISMA had earlier forecast a strong rebound in India’s sugar production for the next season, rising from an estimated five-year low of 29.5 million tonnes (MT) in the ongoing 2024-25 season (October–September).
According to the consulting firm Crisil Ratings, Ethanol diversion is anticipated to increase to 4 MT in the 2025-26 season from 3.5 MT in the current season, driven by robust sugar production and the government’s goal of achieving 20% ethanol blending in petrol, which enables faster cash-flow rotation.
Crisil further forecasts that India’s gross sugar production is likely to rise by 15% in the 2025-26 season (October-September) to around 35 MT, driven by expectations of an ‘above average’ monsoon boosting cane acreage and yields in key sugar-producing states including Maharashtra and Karnataka. It also noted that the expansion in sugar output is expected to ease domestic supply pressures and may enable increased ethanol diversion along with a revival in sugar exports.
The Ethanol Blended Petrol (EBP) Programme is aimed at achieving multiple objectives, including tackling environmental issues, reducing reliance on imports, and strengthening the agriculture sector. Since 2014, the government has introduced several initiatives to support farmers and ethanol producers in scaling up production under the Ethanol Blended Petrol (EBP) Programme. These measures include expanding the range of feedstock allowed for ethanol production, introducing an administered pricing mechanism for ethanol procurement under the EBP Programme, reducing the GST rate on ethanol for EBP to 5%, and amending the Industries (Development and Regulation) Act to ease both intrastate and interstate movement of ethanol.
The government has also streamlined the ethanol procurement process for Public Sector Oil Marketing Companies (OMCs) and advanced the target for achieving 20% ethanol blending in petrol from 2030 to the Ethanol Supply Year (ESY) 2025-26. Additionally, between 2018 and 2022, the government launched various Ethanol Interest Subvention Schemes (EISS) to promote ethanol production from both molasses and grains, facilitating the establishment of ethanol production plants. Public Sector OMCs have also entered into Long Term Offtake Agreements (LTOAs) with Dedicated Ethanol Plants (DEPs) to ensure steady procurement and supply of ethanol.
To meet the 20% blending target by 2025, an estimated 1,016 crore litres of ethanol will be required specifically for blending purposes, while an additional 334 crore litres will be needed for other industrial uses. This brings the total expected ethanol demand in the country by 2025 to approximately 1,350 crore litres. Accordingly, to produce the required 1,350 crore litres of ethanol for both blending and industrial uses, an installed capacity of around 1,700 crore litres must be in place by 2025, assuming production facilities operate at 80% of their installed capacity.
ISMA, therefore, firmly urges the government to retain restrictions on fuel ethanol imports, emphasizing their critical role in protecting farmer incomes, sustaining domestic production capacity, and ensuring policy stability. Highlighting significant investments, job creation, and progress under the Ethanol Blended Petrol Programme, it stresses that lifting import restrictions could undermine self-reliance, rural development, and India’s broader energy security objectives.
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