The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, on Wednesday cleared a hike in price of ethanol, a by-product of sugar, which state-run petrol retailers purchase from millers, a move that will aid the country’s fuel-blending programme and ensure higher prices for farmers to cover for increased cultivation costs.
The Modi government’s fuel-blending programme aims to reduce dependence of the world’s third-largest oil importer on overseas petroleum purchases.
The administered, or federally set, price of ethanol derived from C heavy molasses, a byproduct of cane crushing, for the ethanol supply year 2024-25 (November 1, 2024 to October 31st 2025) has been fixed at ₹57.97 per litre, up from ₹56.58 per litre earlier, a raise of 2.5%.
According to a Cabinet statement, the estimated savings in foreign exchange during last 10 years (2014-15 to 2023-24) due to ethanol blending was USD 14.4 billion.
On June 5, 2021, PM Modi announced the advancing of the target year for 20% ethanol-blending in petrol to 2025-26 from 2029-30. The mixing of petrol with ethanol is a high-priority national programme to help lessen oil imports.
In January 2021, the Union government had notified a modified scheme to incentivise ethanol production in the country, which provides cheaper loans to sugar mills to set up ethanol-blending factories.
Such ethanol projects would be viable because oil marketing companies would be assured buyers for the next 10 years under the scheme, according to an official.
Ethanol can also be made from grains, such as rice and maize. Till a year ago, an estimated 3% of the ethanol blending programme was grain-based, mainly using federal grain stocks. According to the food ministry, nearly 6 million tonne of sugar by-products (or 18% of the total) would be utilised to make ethanol by 2025.
Other decisions to ramp up blending include enhancement of ethanol distillation capacity to 1713 crore, or 17.13 billion litres per year and long-term agreements to set up dedicated ethanol plants in ethanol-deficit states, Union I&B minister Ashwini Vaishnaw told reporters.
India has drawn up plans to also use more maize to make ethanol for the country’s fuel-blending programme and ramp up output nearly 10 times in five years, HT had reported on March 4 last year.
Over the longer term, the country aims to lessen the use of sugarcane-based ethanol and utilize more maize grown in a sustainable way for which the Union government has approved new research projects worth ₹24.51 crore, according to documents seen by HT.
The Union government has committed an outlay of ₹15.46 crore for the state-run Indian Institute of Maize Research (IIMR) to increase corn production in the catchment areas of ethanol industries. The IIMR will disseminate best management practices and hybrids in 15 catchment areas in 78 districts of 16 states.
Scientists from IIMR have also been mandated to step up research for climate-resilient high-starch maize hybrids by financial year 2025-26 for which ₹5.32 crore have been earmarked. Another ₹3.73 crore has been set aside for scaling up silage or maize feed value chain, according to the documents.