India's ethanol blending program, aimed at reducing oil imports and supporting farmers, has seen a major shift where grains like maize and rice now contribute more to ethanol production than sugarcane-based sources. This transition, highlighted in recent data for the 2024-25 supply year, is driven by favorable pricing policies and poor sugarcane harvests due to droughts, raising concerns about sustainability, food security, and the sugar industry's future amid the push for 20% blending by 2025-26.
What is Ethanol and How is it Produced in India?
Basic Definition: Ethanol is a biofuel, essentially 99.9% pure alcohol, blended with petrol to reduce fossil fuel dependence, cut emissions, and support agriculture; in India, it's produced via fermentation where yeasts convert sugars into alcohol, followed by distillation and dehydration.
Sugarcane-Based Production: Traditionally from molasses (byproduct of sugar extraction) or direct cane juice; C-heavy molasses yields low sucrose, B-heavy has higher, and juice/syrup skips sugar production entirely—originally aimed at helping sugar mills clear farmer dues.
Grain-Based Production: Involves grains like maize or rice; starch is milled into flour, broken into simple sugars using enzymes, then fermented—requires more processing but uses surplus or damaged grains, with one tonne of maize yielding about 380 litres of ethanol.
Historical Context: India's program started in 2003 with 5% blending, rising to 10% by 2018; post-2018 policies allowed multi-feed use, boosting output from 189 crore litres in 2018-19 to 672.49 crore in 2023-24.
Why Has Grain-Based Ethanol Overtaken Sugarcane in India's Program?
Policy Incentives: Since 2018-19, government fixed higher prices for grain ethanol (e.g., Rs 71.86/litre for maize vs. Rs 57.97 for C-heavy molasses), encouraging standalone distilleries and multi-feed units to switch during off-seasons.
Drought and Supply Constraints: Poor sugarcane harvests in 2023-24 and 2024-25 (output fell to 319 lakh tonnes and estimated 261.1 lakh tonnes) led to curbs on B-heavy and juice diversion, reducing sugarcane ethanol from 45 lakh tonnes sugar equivalent in 2022-23 to 35 lakh tonnes in 2024-25.
Economic Viability: Grain sources offer year-round production unlike seasonal sugarcane (November-April crushing); investments of Rs 40,000 crore have built 1,822 crore litres capacity, with grains dominating offers (1,304.86 crore litres for 2025-26).
Surplus Utilization: Uses FCI's broken/damaged rice (5.2 million tonnes allocated for 2025-26) and maize, turning waste into fuel while creating farmer markets.
What is the Ethanol Blending Program and Its Goals?
Program Overview: Launched to blend ethanol in petrol, reducing oil imports (saved Rs 99,469 crore by 2023-24) and emissions (cut 519 lakh tonnes CO2); blending rose from 1.6% in 2013-14 to 19.12% in 2024-25.
Targets and Progress: Aims for 20% by 2025-26 (E20), requiring 1,050 crore litres annually; achieved via incentives like interest subvention for distilleries and separate pricing for feedstocks.
Benefits: Supports farmers (paid Rs 1.45 lakh crore to mills/distilleries by 2023-24), boosts rural economy, and aligns with net-zero by 2070; created 70,000 jobs and attracted investments.
Global Comparison: Similar to Brazil (27% blending from sugarcane) and US (10% from corn), but India's dual sugarcane-grain approach balances agriculture and energy.
What Are the Economic Impacts of This Shift?
Boost to Grain Farmers: Maize acreage expanded (e.g., 10-12 million tonnes for ethanol in 2024-25), providing stable markets amid 42 million tonnes production; rice uses FCI surpluses, reducing storage costs.
Sugar Industry Challenges: Reduced diversion lowers mill revenues; net sugar output dropped, but domestic consumption (280-285 lakh tonnes) and exports (40 lakh tonnes) maintain balance—industry seeks price parity.
Investments and Capacity: 499 distilleries with multi-feed tech; grain units in non-sugarcane states like Bihar (leading producer) drive regional growth, but excess capacity (1,700 crore litres needed for 20%) risks underutilization.
Broader Economy: Reduced oil imports, forex savings; however, rising maize demand turned India from exporter to importer, potentially inflating feed costs for poultry/milk (maize is 50-60% of feed).
What is the Food vs Fuel Debate in This Context?
Core Concern: Diverting grains from food/feed to fuel; maize for ethanol (11 million tonnes) competes with livestock needs amid rising meat/egg demand; rice diversion (5.2 million tonnes) from FCI affects public distribution if surpluses dwindle.
Environmental Costs: Sugarcane is water-intensive (2,500 litres/kg sugar), but grain ethanol reduces this; however, overall mining water/land for biofuels raises sustainability issues—ethanol from lignocellulose (crop residues) is a greener alternative but underdeveloped.
Social Impacts: Benefits small farmers via better prices, but price hikes (e.g., 10% wheat increase due to maize diversion) affect consumers; protests highlight hidden costs like import reliance.
Mitigation: Policies promote second-generation ethanol from residues; experts suggest capping grain diversion at 10-15% of production to balance.
What Are the Challenges and Future Prospects?
Sustainability Issues: Variable FCI rice surpluses (not annual guarantee); maize imports needed if production doesn't rise 10 million tonnes by 2030; technical limits on blending beyond 20% without engine modifications.
Policy Recommendations: Equalize prices across feedstocks; invest in advanced biofuels; expand maize cultivation via incentives—government's NCMM-like approach for minerals could apply here.
Global and National Outlook: Aligns with MSP (maize at Rs 2,320/quintal for ethanol rice); potential for 30% blending by 2030 if residues tapped; challenges include climate risks to crops and geopolitical oil fluctuations.
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