India’s ethanol industry is at a crossroads, with a production capacity of 1822 crore litres (Till July 31st, 2025), but around 58% utilization due to limited (1050 Crore Litres) blending requirements. This has resulted in financial stress for the industry, impacting sugarcane farmers and the overall economy. However, with the government’s intervention, this crisis can be turned into an opportunity. By increasing ethanol blending to 27% and allowing exports, the industry can be revitalized, benefiting farmers, sugar factories, and the nation.
The Current scenario:
The ethanol industry has invested over ₹40,000 crores in plant establishments, but due to limited blending requirements, a significant portion of the production capacity remains idle. This has led to financial stringency for sugar factories, making it challenging for them to pay farmers on time. The situation is further exacerbated by the mounting dues to banks, government, and employees.
The solution:
1. Increase ethanol blending: By increasing the ethanol blending percentage from 20% to 27%, the industry can utilize a significant portion of its production capacity. This will not only help sugar factories and distilleries but also reduce the country’s dependence on imported fossil fuels.
2. Allow ethanol exports: Permitting ethanol exports can help the industry tap into the global market, generating revenue and earning foreign exchange. This will also encourage the industry to produce more, benefiting farmers and the economy.
Benefits:
– Revitalization of the ethanol industry: Increased blending and exports will help utilize the idle capacity, generating revenue and creating a more sustainable industry.
– Benefits to farmers: Sugar factories will be able to pay farmers on time, enhancing their productivity and income.
– Foreign exchange savings: Reduced dependence on imported fossil fuels and increased ethanol exports will save/earn foreign exchange for the country.
– Economic growth: The industry’s revival will have a positive impact on the economy, generating employment and stimulating growth.
The way forward:
The government needs to exercise its political will to implement these solutions. The grievances of the automobile industry can be addressed through suitable modifications and incentives. By unlocking the ethanol potential, India can create a win-win situation for farmers, the industry, and the economy.
A small step today can lead to a giant leap for the ethanol industry and the nation’s economy.
P.G. Medhe is the former Managing Director of Shri Chhatrapati Rajaram Sahakari Sakhar Karkhana Ltd and sugar industry analyst. He can be contacted at +91 9822329898.
