The National Policy on Biofuels – 2018, amended in 2022, set a revised target of 20% ethanol blending in petrol (E20), advancing the original deadline from 2030 to the Ethanol Supply Year (ESY) FY26. Public Sector Oil Marketing Companies (OMCs) achieved 10% ethanol blending in June 2022, five months ahead of the schedule set for ESY FY22. Ethanol blending levels increased progressively, reaching 12.06% in ESY FY23, 14.60% in ESY FY24, and 17.98% in ESY FY25 as of February 28, 2025. However, no decision has been made yet to increase blending levels beyond 20% ethanol (E20).

Ethanol Blending Progress in India

India’s ethanol blending journey has witnessed significant milestones under the Ethanol Blended Petrol (EBP) Programme, which was launched in 2014. The blending percentage increased steadily, supported by government policies and incentives that boosted ethanol production and facilitated inter-state ethanol movement. The government’s Ethanol Interest Subvention Scheme (EISS) and Long-Term Offtake Agreements (LTOAs) further promoted ethanol production from molasses, sugarcane juice, maize, broken rice, and agricultural residues.

Timeline of Ethanol Blending Progress

• June 2022: Achieved 10% ethanol blending in petrol, five months ahead of target.
• ESY FY23: Ethanol blending increased to 12.06%.
• ESY FY24: Achieved 14.60% ethanol blending.
• ESY FY25 (as of February 28, 2025): Blending reached 17.98%.

Roadmap for Ethanol Blending and Efficiency Challenges

The inter-ministerial committee’s Roadmap for Ethanol Blending in India 2020-25 identified the potential of 20% ethanol-blended petrol (E20), but noted a marginal reduction in fuel efficiency for E10-calibrated four-wheelers. However, this efficiency loss can be mitigated with engine hardware modifications, ensuring that vehicles calibrated for E20 maintain optimal performance and fuel efficiency.

Impact of E20 Blending on Fuel Efficiency

• E10-Calibrated Engines: Experience marginal efficiency loss when using E20 fuel.
• E20-Calibrated Engines: Require engine modifications to offset this loss and maintain performance.

Government Measures to Promote Ethanol Production

To support ethanol production and adoption, the Indian government has introduced several measures aimed at promoting ethanol blending through financial incentives, regulatory reforms, and policy interventions.

Key Government Initiatives

1. Ethanol Interest Subvention Scheme (EISS): Provides financial support and subsidised interest rates to promote ethanol production from molasses and grains.
2. Long-Term Offtake Agreements (LTOAs): Ensures guaranteed procurement of ethanol by OMCs, providing market stability and incentives for producers.
3. Subsidised Pricing and GST Reforms: Ethanol producers benefit from subsidised pricing and a 5% Goods and Services Tax (GST) rate, ensuring the viability of ethanol production.
4. Ethanol Blended Petrol (EBP) Programme: Facilitates ethanol blending with petrol through regulatory amendments and streamlined processes for inter-state ethanol movement.

Promoting Ethanol Feedstocks for Sustainable Growth

The National Biofuel Coordination Committee (NBCC) permits the use of food grains for ethanol production during surplus phases, ensuring that ethanol production does not impact food security. The government is actively promoting diverse ethanol feedstocks, including:

• Sugarcane Juice and Molasses: Primary sources for ethanol production.
• Maize and Broken Rice: Increasing availability of ethanol from grain-based sources.
• Agricultural Residues: Leveraging agricultural waste for sustainable ethanol production.

Addressing Challenges Beyond 20% Ethanol Blending

Although no decision has been made to increase ethanol blending beyond 20% (E20), the government is exploring technology enhancements and policy reforms to facilitate higher blending percentages while addressing associated challenges.

Key Challenges and Proposed Solutions

1. Fuel Efficiency Loss in Conventional Engines:
   • Solution: Modify engine hardware to adapt to higher ethanol blends, ensuring optimal performance with E20 and beyond.
2. Infrastructure Readiness for Higher Blends:
   • Solution: Expand fuel infrastructure, blending facilities, and storage capacity to accommodate higher ethanol blends.
3. Feedstock Availability and Production Capacity:
   • Solution: Diversify ethanol feedstocks and scale up production capacities to ensure adequate supply for higher blending targets.

Boosting Ethanol Production through Financial Incentives

The government continues to support ethanol producers through financial incentives and policy reforms aimed at boosting production and facilitating seamless integration into the fuel ecosystem. The introduction of Ethanol Interest Subvention Schemes (EISS) and Long-Term Offtake Agreements (LTOAs) ensures that ethanol producers can scale operations sustainably.

Ethanol Incentive Schemes at a Glance

• EISS: Offers subsidised interest rates and financial support for ethanol production from molasses and grains.
• LTOAs: Guarantees ethanol procurement by OMCs, ensuring market stability and revenue security.

Ethanol Blending and Its Impact on India’s Energy Security

Achieving higher ethanol blending targets contributes significantly to India’s energy security, reducing the country’s dependence on imported crude oil. Ethanol blending also plays a crucial role in cutting carbon emissions and promoting sustainable energy sources, aligning with India’s commitment to achieving net-zero emissions by 2070.

Benefits of Increased Ethanol Blending

• Reduced Crude Oil Imports: Lower fuel import dependency and enhanced energy security.
• Environmental Sustainability: Reduction in greenhouse gas (GHG) emissions and promotion of biofuels.
• Economic Boost for Farmers: Increased demand for ethanol feedstocks benefits farmers and supports the rural economy.

Future Outlook: Pathway to 20% and Beyond

India’s progress in ethanol blending underscores the government’s commitment to sustainable fuel adoption and energy diversification. As the country gears up to achieve 20% ethanol blending by FY26, the focus remains on addressing efficiency challenges, enhancing infrastructure readiness, and ensuring adequate feedstock availability. With continued government support and technological advancements, India is well-positioned to explore higher ethanol blending targets beyond 20% in the coming years.

Conclusion

India’s ambitious ethanol blending programme, supported by policy reforms, financial incentives, and technological advancements, is driving the nation towards sustainable energy goals. While challenges remain in achieving blending levels beyond 20%, ongoing government efforts and industry collaboration position India as a global leader in ethanol adoption and biofuel innovation.

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