9JUNE 2025ETHANOL CAPACITY SOARS 4X TO 1,810 CR LITRES IN MODI GOVT'S 11 YEARSGADKARI SEEKS 5% GST ON CRUDE ETHANOL TO BOOST FLEX-FUEL VEHICLESIndia's ethanol production capacity has grown from 421 crore litres in 2013 to 1,810 crore litres by 2024, a fourfold increase in production capacity over 11 years. A senior official stated that the growth was primarily due to the favourable policy interventions and financial support implemented by the central government.The Ethanol Blended Petrol Programme, first launched in 2003 aimed primarily at reducing crude oil import dependence, reducing carbon emissions, and increasing the incomes of farmers, has now gained real momentum While India is preparing for a vast renovation of its Goods and Services Tax System (GST), Nitin Gadkari, the Union Minister for Road Transport and Highways, made a new argument to reduce the GST on Gross Ethanol from 18 to 5 percent. The measure can accelerate the adoption of flexible vehicles and support the clean energy transition in India. While more than 400 gas stations across the country now provide 100 percent ethanol, consumer absorption has as ethanol blending with petrol has increased from 1.53 per cent in 2013-14 to 18.74 per cent by May 25 in the current ethanol supply year (2024-25).The official mentioned that ethanol supplied to Oil Marketing Companies grew over 18 times, growing from 38 crore litres in 2013-14 to over 707 crore litres in 2023-24. The growth has also so far saved foreign exchange more than Rs. 1.10 lakh crore, while generating about Rs. 2 lakh crore in revenue for distilleries over the past decade.Government schemes offering interest subvention have been crucial in this respect. Under these schemes, financial institutions can provide loans to distilleries at subsidized interest rates, while governments subsidize (for a maximum period of 5 years) up to 6 per cent of the interest costs. In early March 2025, the government launched a new scheme for cooperative sugar mills to ease the transition towards multi-feed size ethanol plants.Of the total capacity, 816 crores per year (Litre per year) is molasses-based, 858 Crores is grain-based, and 136 Crores is dual-feed.The government has set a target overall 20 per cent blending for the 2025­26 supply year, which aligns with its overall objectives on energy security and sustainable development objectives. remained warm. Gadkari believes that a more favorable tax regime could provide the necessary impulse to demand. His proposal arrives at a crucial moment, with Finance Minister Nirmala Sitharaman leading an initiative to rationalize the GST structure. Currently, employees are reviewing several proposals designed to simplify tax slabs, increase efficiency, and address classification inconsistencies that have emerged since the GST was launched in 2017. The previous efforts of two separate ministers (Goms) to achieve consensus on GST reforms failed to gain traction. A third GOM is now reviewing the controversial edition of the cease, particularly the remuneration CESS, scheduled to expire in March next year. The GST regime of India is currently divided into four main slabs, 5, 12, 18, and 28 percent, with most revenue from the 18 percent category. Sector groups are consistently pressured by simplification, including the potential fusion of 12 and 18 percent stands in a unified 15 to 16 percent slab. However, these changes may lead to cautious revenue and resistance deficits with tax impacts. Gadkari's call to relieve the tax burden on Gross Ethanol aligns with broader national goals to reduce oil imports and promote alternative fuels. Whether this recommendation will be incorporated into the next GST Reforms remains to be seen.
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