The 2023-24 season has witnessed a series of ups and downs for India’s sugar and ethanol industry, marked by both challenges and promising developments. Last December, the department restricted ethanol production to ensure an adequate supply of sugar in the domestic market. However, this restriction was later lifted to provide relief to the industry. This move has rekindled optimism, as evidenced by the recent tender offers for the 2024-25 ethanol supply year (ESY).
The enthusiasm for increased ethanol production is palpable, demonstrated by the recent tender offers for ESY 2024-25. Oil Marketing Companies (OMCs) invited tenders for 916 crore liters of denatured anhydrous ethanol, and the response has been remarkable, with offers exceeding 970 crore liters—an encouraging six percent surplus over the requirement. This strong response reflects the commitment of manufacturers, with significant contributions expected from both sugarcane and grain-based feedstocks. Of the total offers of 970.80 crore liters, 391.40 crore liters is from sugarcane-based feedstocks, while 579.40 crore liters is from grain-based feedstocks. The positive response from ethanol manufacturers is particularly encouraging, especially as the government has recently implemented various measures to boost ethanol production. The target for 20 percent ethanol blending now seems achievable, having been advanced from 2030 to ESY 2025-26.
OMCS have allocated around 837 crore liters of ethanol against 970 crore liters of offers submitted by manufacturers across the country for Ethanol Supply Year (ESY) 2024-25 – Cycle 1.
For ESY 2024-25, it is important to note that OMCs will procure ethanol sourced from sugarcane juice/Sugar/sugar syrup, B-Heavy Molasses, C-Heavy Molasses, damaged food grain and maize at the prevailing rates for ESY 2023-24 (including incentive amount) till such time these rates are revised by OMCs/Government of India. The industry remains optimistic that ethanol prices will be adjusted, resulting in OMCs receiving more offers than required during the annual tender for ethanol supplies in ESY 2024-25. Consequently, the government and OMCs should take steps to increase ethanol prices to ensure a smooth supply of biofuel and encourage producers to engage more actively with the Ethanol Blended Petrol (EBP) Programme. A price increase could boost ethanol production and strengthen the financial stability of sugar mills, allowing them to settle cane dues more efficiently. Grain-based distilleries are also raising concerns that current prices for FCI rice and maize are not viable for ethanol production, necessitating adjustments. A cooperative approach among the government, OMCs, and producers is essential to foster an environment where ethanol production can thrive sustainably.
Recent discussions on a roadmap for increasing ethanol adoption post-2025 signal the government’s recognition of the importance of long-term planning. This initiative follows substantial investments in ethanol manufacturing, likely to boost biofuel production. The results are already visible: the EBP Programme is benefiting farmers and producers while contributing to significant foreign exchange savings. According to Union Minister Hardeep Singh Puri, India saved ₹1,06,072 crore in foreign exchange, paid ₹90,059 crore to farmers, substituted 181 lakh metric tons of crude oil, and reduced CO2 emissions by 544 lakh metric tons between 2014 and August 2024.
As of September, ethanol blending in petrol reached 15.90%, with cumulative blending from November 2023 to September 2024 at 13.80%. These figures illustrate the growing momentum that the government hopes will lead to achieving the 20% blending target by 2025. With India’s ethanol production capacity now at 1,648 crore liters, the future looks promising.
The future of India’s sugar and ethanol industry is bright, supported by a collaborative environment between government and industry stakeholders. By fostering collaboration and revising pricing structures, the government can ensure that this burgeoning sector not only meets domestic needs but also paves the way for a more sustainable and economically viable future. The time to act is now, and the sweet potential of ethanol could be key to unlocking a greener tomorrow for India.
