Ethanol Capacity Soars 4X to 1,810 Cr Litres in Modi Govt's 11 Years

India'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.

Key Insights:
• Ethanol production capacity over 1,810 crore litres since 2013
• Ethanol supply to OMCs increased 18-fold from 38 to 707 crore litres
• India targets 20 percent ethanol blending by the 2025-26 supply year

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 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.

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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 2025–26 supply year, which aligns with its overall objectives on energy security and sustainable development objectives.