Cabinet Approves Revised Ethanol Procurement Prices to Boost Blending and Sustainability

New Delhi: The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has approved the revision of ethanol procurement prices for Public Sector Oil Marketing Companies (OMCs) for the Ethanol Supply Year (ESY) 2024-25, which spans from 1 November 2024 to 31 October 2025.

This move aligns with the government’s Ethanol Blended Petrol (EBP) Programme and reflects India’s continued efforts to enhance energy security, reduce reliance on crude oil imports, and support the agricultural sector.

Revised Pricing and Impact on Ethanol Suppliers

Under the revised framework, the administered ex-mill price of ethanol derived from C Heavy Molasses (CHM) has been fixed at Rs 57.97 per litre, marking an increase from Rs 56.58 per litre. The price of ethanol from B Heavy Molasses (BHM) has been revised to Rs 66.05 per litre, up from Rs 65.61 per litre.

Meanwhile, ethanol derived from sugarcane juice/sugar/sugar syrup will now be procured at Rs 77.36 per litre, compared to the previous Rs 76.76 per litre. This price adjustment aims to ensure the sufficient availability of ethanol to meet the growing demand under the blending program.

Furthermore, Goods and Services Tax (GST) and transportation charges will be paid separately, ensuring that ethanol suppliers receive a remunerative price for their products.

The decision to raise ethanol prices is expected to bolster ethanol production, encourage investment in ethanol distilleries, and provide a stable income stream for sugarcane farmers. It also aligns with the government’s broader goal of achieving a 20 per cent ethanol blending target by 2025-26, advancing the original target set for 2030.

Ethanol Blended Petrol Programme: A Decade of Progress

India’s ethanol blending initiative has seen remarkable growth over the last decade. The blending percentage has surged from 1.53 per cent in ESY 2013-14, when 38 crore litres of ethanol were supplied, to 14.60 per cent in ESY 2023-24, with ethanol procurement reaching 707 crore litres.

This expansion has contributed significantly to reducing India’s crude oil dependence. As of 31 December 2024, ethanol blending has saved more than Rs 1,13,007 crore in foreign exchange and substituted approximately 193 lakh metric tonnes of crude oil.

The government’s commitment to scaling up ethanol production is evident in its establishment of a detailed roadmap for ethanol blending, focusing on expanding feedstock sources and promoting investment in ethanol distillation.

The ethanol distillation capacity in India has already been expanded to 1,713 crore litres per annum, enabling higher blending rates. OMCs are now targeting an 18 per cent ethanol blending rate in ESY 2024-25, moving steadily towards the 20 per cent goal.

Government Initiatives and Policy Support

The government has taken several steps to facilitate ethanol production and blending, ensuring an ecosystem conducive to sustainable energy development. This includes:

1. Long-Term Offtake Agreements (LTOAs) – OMCs have signed LTOAs to establish Dedicated Ethanol Plants (DEPs) in ethanol-deficient states, ensuring regional availability of ethanol.
2. Expansion of Feedstock Use – The government has been encouraging the conversion of single-feed distilleries into multi-feed units, allowing for greater ethanol production using diverse raw materials.
3. Promotion of Flexi-Fuel Vehicles – The rollout of flex-fuel vehicles and the availability of E-100 and E-20 fuel blend support the adoption of ethanol-based mobility solutions.
4. Pradhan Mantri JI-VAN Yojana – The scheme has been modified to extend its implementation timeline until 2028-29, attracting greater investment in second-generation biofuels.

Economic and Environmental Benefits of Ethanol Blending

Ethanol blending offers multiple benefits, ranging from economic gains to environmental sustainability:

• Foreign Exchange Savings: Reduced oil imports help conserve foreign currency reserves, strengthening India’s economic position.
• Rural Economic Growth: Increased ethanol production provides sugarcane farmers with additional income, supporting rural economies.
• Environmental Sustainability: Ethanol blending reduces carbon emissions, improving air quality and contributing to India’s climate action commitments.
• Energy Security: Domestic ethanol production enhances India’s energy independence and reduces vulnerability to global oil price fluctuations.

India’s Leadership in Ethanol Blending

India’s ethanol push is also aligned with its active role in the Global Biofuels Alliance (GBA), a multi-stakeholder initiative launched by Prime Minister Narendra Modi during the G20 Summit in 2023.

As a key member of GBA, India is positioning itself as a global hub for biofuels, leveraging its policy framework and production capabilities to support international biofuel adoption. The revised ethanol procurement prices further strengthen India’s commitment to sustainable energy, reinforcing its leadership in biofuels on the global stage.

India’s rapid progress in ethanol blending is claimed to be extremely significant as Union Minister Ashwini Vaishnaw highlighted that there are countries which took 40 years to achieve significant blending milestones, while India has achieved remarkable results in just a decade.

He emphasized that the current 14.60 per cent blending rate brings the country closer to the 20 per cent target, demonstrating India’s commitment to sustainable energy solutions.

Here it should be noted that with robust policy support, investment in ethanol infrastructure, and continuous efforts to expand ethanol production, India is poised to become a global leader in biofuel adoption.

The recent decision to revise ethanol procurement prices further reinforces the government’s determination to achieve its energy and environmental goals while benefiting farmers and strengthening the domestic biofuel industry.

As the ESY 2024-25 progresses, stakeholders across the energy, agriculture, and automotive sectors will play a critical role in driving ethanol adoption and ensuring the successful implementation of India’s ethanol blending roadmap.

Also Read –

Cabinet Approves Rs 34,300 Cr ‘National Critical Mineral Mission’ to Strengthen Green Tech and Energy Security