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India's Ethanol Revolution: A Pioneering Stride Towards Energy Independence and Agricultural Prosperity

With an estimated capacity of 1380 crore liters as of November 30, 2023, India's ethanol production capacity has achieved a noteworthy milestone. This sturdy capacity is made up of 505 crore liters from grains and 875 crore liters from molasses.

Shivam Dwivedi
India's Ethanol Revolution: A Pioneering Stride Towards Energy Independence and Agricultural Prosperity (Photo Source: Pixabay)
India's Ethanol Revolution: A Pioneering Stride Towards Energy Independence and Agricultural Prosperity (Photo Source: Pixabay)

Under the Ethanol Blended with Petrol (EBP) Programme, the Indian government has set ambitious goals to blend 20% ethanol with petrol by 2025. To achieve this target, an estimated 1016 crore litres of ethanol is required, with the overall demand, including other uses, reaching 1350 crore litres. In preparation for this, the country needs an ethanol production capacity of 1700 crore litres by 2025, operating at 80% efficiency.

Ethanol Interest Subvention Schemes to Boost Production

To enhance ethanol production and meet the blending targets, the government has implemented various ethanol interest subvention schemes from July 2018 to April 2022. These schemes aim to encourage entrepreneurs to establish new distilleries or expand existing ones, covering molasses-based, grain-based, and dual-feed-based facilities.

The government is providing interest subvention at a rate of 6% per annum or 50% of the interest charged by financial institutions, whichever is lower, for five years, including a one-year moratorium. This initiative has led to investment opportunities exceeding Rs 40,000 crore, benefitting both urban and rural areas.

Remarkable Growth and Supply Increase

Thanks to effective government policies, the supply of ethanol to Oil Marketing Companies (OMCs) has surged by over 13 times, reaching about 502 crore litres in the Ethanol Supply Year (ESY) 2022-23, up from 38 crore litres in ESY 2013-14. Simultaneously, the blending percentage has grown from 1.53% in ESY 2013-14 to the targeted 12% in ESY 2022-23.

Positive Impact on Agricultural Economy

The increase in ethanol sales has significantly improved the cash flows for sugar mills, leading to prompt payments to cane farmers. In the Sugar Season (SS) 2022-23, sugar mills cleared 98.3% of cane dues, and in the previous SS 2021-22, they cleared 99.9% of cane dues.

Over the past decade, sugar mills have generated revenue exceeding Rs 94,000 crores from ethanol sales, contributing substantially to their bottom line. Additionally, the production of ethanol has resulted in a proportional reduction in petrol and crude oil imports, saving India approximately Rs 24,300 crores in foreign exchange in the fiscal year 2022-23 and significantly enhancing the nation's energy security.

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