Government unveils new scheme to boost ethanol production

To achieve 20% ethanol blending by 2025-26, the Government has launched a new scheme to convert sugarcane-based ethanol plants into multi-feedstock units. In Ethanol Supply Year (ESY) 2023-24, 672 crore litres of ethanol were supplied to Oil Marketing Companies for blending. As of February 23, 2025, 261 crore litres have been supplied in ESY 2024-25. To achieve 20% ethanol blending in ESY 2025-26, India will need around 1016 crore litres.

In a significant move towards achieving 20% ethanol blending (E20) with petrol by 2025-26, the Central Government notified a new scheme on March 6, 2025, to convert sugarcane-based ethanol plants in Cooperative Sugar Mills into multi-feedstock-based ethanol plants. This aims to diversify ethanol production and enhance the country’s shift towards cleaner fuels.

During Ethanol Supply Year (ESY) 2023-24, 672 crore litres of ethanol were supplied to Oil Marketing Companies (OMCs) for blending. As of February 23, 2025, in the ongoing ESY 2024-25, about 261 crore litres have been produced. However, to meet the 20% blending target in ESY 2025-26, India will require an estimated 1016 crore litres of ethanol.

Material compatibility for E20-fueled engines has been in place since April 2023, and the Government plans to begin rolling out E20-tuned vehicles from April 2025. While these vehicles may experience a slight drop in fuel efficiency, the E20 initiative is expected to cut fossil fuel imports and carbon emissions.

To promote ethanol production, various incentives have been introduced, including- Interest Subvention Schemes (2018–2022), GST reduction on ethanol for the EBP Programme from 18% to 5%, promotion of maize as a key feedstock, and Long Term Offtake Agreements (LTOAs) by OMCs with Dedicated Ethanol Plants (DEPs).

Additionally, the Pradhan Mantri JI-VAN Yojana, launched in 2019 and amended in 2024, offers financial support for advanced biofuel projects.

Union Minister Nimuben Jayantibhai Bambhaniya highlighted that diversifying ethanol sources beyond sugarcane is crucial to achieving India’s green fuel goals. This multi-feed ethanol policy is a step toward energy self-reliance, reduced fuel imports, and a sustainable biofuel-based economy.