In opposition to that, the requirement for obligatory 20% ethanol mixing with petrol (E20) is estimated at nearly 11 billion litres within the present ethanol 12 months that started final November. In impact, greater than 50% extra capability is build up within the system, the unintended consequence of a coverage push that raced forward of a clearly articulated long-term highway map.
Ethanol is a inexperienced gasoline produced by fermenting sugar or foodgrain. It’s broadly recognised as a cleaner and renewable different to pure fossil fuels.
Distilleries, mentioned trade officers, are utilising simply 25-30% of capability whereas contemporary approvals for brand spanking new vegetation have been halted.
Affect throughout worth chain
The pressure of extra capability and ensuing demand and regulatory uncertainty is seen throughout the worth chain — from sugar mills and grain processors to farmers earlier inspired to see ethanol as a secure income different.
In accordance with the All India Distillers’ Affiliation (AIDA), ethanol has developed right into a Rs 50,000 crore trade, propelled by the federal government’s formidable plans for the sector. Through the years, distilleries arrange about 20 billion litres capability for supplying to grease advertising and marketing firms. Nevertheless, the lower-than-expected offtake has since resulted in underutilised capability and extra stock.
“Many distilleries had been put up, pondering that ethanol consumption would progressively enhance,” mentioned Deepak Ballani, director common of the Indian Sugar & Bio Vitality Producers Affiliation. “The federal government must step up mixing. No contemporary permissions are being given to arrange distilleries until the federal government provides readability.”
Elevating the mixing goal from the present 20% may very well be an uphill process as discussions amongst policymakers on the difficulty stalled final 12 months after a social media backlash over potential harm to autos not designed to run on larger ethanol blends. Whereas the federal government dismissed the criticism as motivated, it hasn’t taken any concrete steps since to lift the mixing threshold.
Drivers have additionally sought a worth low cost for ethanol-blended gasoline, citing its decrease power content material — a couple of third lower than pure petrol. A 20% mix is estimated to minimize gasoline effectivity by greater than 3%. The oil ministry nonetheless rejected the demand in August, saying ethanol was costlier than petrol.
In accordance with AIDA, throughout 2024-2025, round 100 new distilleries began operations and some extra are nonetheless getting commissioned. Nevertheless, demand development has not saved tempo, as ethanol offtake stays largely depending on present mixing targets.
The trade is at present awaiting authorities mandate for an extra enhance within the mixing proportion past the present 20% to make sure optimum utilisation of put in capacities and keep the monetary viability of investments. India’s ethanol mixing programme was conceived as a multipronged answer—enhance farmer incomes, curb expensive crude oil imports, and decrease vehicular emissions.
The early momentum was robust. Oil advertising and marketing firms contracted aggressively, mills borrowed and expanded, and new grain-based distilleries mushroomed.
Nevertheless, with the present mixing ceiling at E20, the following milestone stays much less outlined. There is no such thing as a readability from the federal government towards larger blends akin to E27, E85, or E100. Neither is there any readability on timelines for increasing mixing into diesel, a far bigger and extra advanced market, mentioned Ballani.
If petrol mixing has at present plateaued at E20, diesel is the plain subsequent frontier although it’s additionally the extra delicate one.
“In contrast to petrol, ethanol would not combine with diesel,” mentioned an oil advertising and marketing firm official, asking to not be named. “Two separate layers are fashioned. So, one wants a coupler chemical to maintain them combined,” the official defined. “Each Indian Oil Company (IOC) and Bharat Petroleum Company (BPCL) are understood to be at superior levels of evaluating ethanol-blended diesel formulations,” the official mentioned.
Mixing diesel with ethanol would additionally doubtless result in stability points, engine compatibility, cold-start behaviour, and long-term sturdiness – requiring rigorous testing. Additionally, home diesel consumption far exceeds petrol. Diesel is used to energy freight corridors, tractors, buses, and a big share of passenger autos. Any large-scale rollout carries reputational and financial threat if efficiency points emerge.
