iGrain India - The government's push for achieving a 20% ethanol blending target in petrol by 2025-26 is expected to bring significant economic benefits, especially for farmers.
This target, which was initially set for 2030, aims to boost the agricultural sector by generating over Rs 35,000 crore for farmers.
Ethanol production in India primarily relies on sugarcane (including juice, sugar syrup, and molasses) and grains like maize and rice, benefiting both sugarcane farmers and the wider agricultural industry.
As of the 2023-24 marketing season, the ethanol blending percentage reached 14.6%, up from 12.06% in 2022-23, with the target of 10% blending already achieved ahead of schedule in June 2022.
The ethanol blending program has been a significant success, aiding the sugar industry by reducing surplus stocks and providing farmers with improved financial conditions. In fact, sugarcane farmers have received Rs 92,409 crore in payments, further improving their economic situation.
From a national perspective, this program has also led to savings in foreign exchange, reducing the import of crude oil and carbon emissions. By September 2024, India saved Rs 1,08,655 crore in foreign exchange, decreased crude oil imports by 185 lakh tonnes, and reduced carbon dioxide emissions by 557 lakh tonnes.
The government has taken several supportive measures to reach the 20% blending goal. These include expanding raw material sources for ethanol, setting fixed prices for sugarcane-based ethanol, reducing the GST rate on ethanol for blending to 5%, and offering the Ethanol Interest Subsidy Scheme.
Additionally, long-term agreements with oil marketing companies and the sugar industry have been implemented to ensure a steady ethanol supply.