India’s ethanol push: A win-win for energy security and farmers

India’s transition into a sustainable, self-sufficient tomorrow is being driven by a silent, but deep, revolution: the rapidly accelerating adoption of blending ethanol into petrol. Far from a mere technical adjustment to fuel content, this bold drive is yielding an impressive “win-win” for the country, boosting energy security as it also stimulates prosperity across rural India.

For far too long, India, the globe’s third-largest producer and consumer of energy, has struggled with the economic and strategic weaknesses inherent in overdependence on imported crude oil. The Ethanol Blended Petrol (EBP) Programme has been a strong answer, carefully supported by the National Policy on Biofuels—2018 (revised in 2022). The statistics speak for themselves: India had reached an impressive 20% blending of ethanol in petrol by June 2025, five years ahead of its initial target year of 2030.

While acceleration has merits, deadlines also represent strategic resets. To be precise, Public Sector Oil Marketing Companies (OMCs) achieved a 10 per cent ethanol blending target in petrol in June 2022, five months earlier than expected during ESY 2021-22. This fits well with blending uptake; OMCs blending took off in ESY 2022-23 (12.06 per cent), ESY 2023-24 (14.60 per cent), and now ESY 2024-25 (17.98 per cent as of February 28, 2025).

The increase in petrol blending data is a tremendous achievement (between 2014 and 2024), an astonishing 181 lakh tonnes of crude oil were replaced during this period. And what is the significance of this? A whopping 1.36 lakh crore rupees saved in foreign exchange (and therefore greater macroeconomic stability for India from the turbulence of global oil price changes).

A direct line to farmers’ incomes

India’s ethanol drive lies in its multi-dimensional effect, especially on the country’s agricultural sector core. The program has now turned what was previously a surplus, and sometimes distressing, condition for farmers into a steady and profitable venture. By expanding the demand for agricultural output beyond conventional food markets, ethanol production has infused life into rural economies.

Farmers are witnessing a real boost in their incomes. The government’s initiative has ensured a stable market for the feedstock by regularly raising the Minimum Support Price (MSP) of several crops and making guaranteed procurement. 1G ethanol, mainly produced from sugar (sugarcane juice, B-heavy molasses, and C-heavy molasses) and starch (maize, excess FCI rice, and damaged food grains), constitutes the main component of this blending.

This diversified feedstock base gives farmers secure channels to market their products. The direct payment of 1.18 lakh crore rupees to farmers highlights huge financial empowerment at the grassroots level. The continual demand for crops like maize and sugarcane is more than just a number; it means more assured income security, so farmers can spend more on their lands, shift to better farming practices, and secure a living.

There are several channels through which the ethanol economy is building a strong rural economy beyond direct payments:

· Employment generation: The increase in ethanol production capacity, from 38 crore litres in 2014 to 661.1 crore litres as of June 2025, has called for setting up and expanding several distilleries. These units, widely based in rural districts, are big employment generators. From direct recruitment in plant activity, maintenance, and transport to indirect employment in transport and agri-support services, the ethanol sector is generating a thriving employment scenario.

· Industrial development: The 1.96 lakh crore rupees remitted to distilleries equates to a significant investment in the domestic biofuel sector. The injection of this capital fuels technological innovation, infrastructure development, and overall industrial development in the areas where these plants are located, resulting in a multiplier effect on the domestic economy.

· Resource optimisation: The flexibility of the policy in permitting the utilisation of spoilt food grains and excess FCI rice for producing ethanol addresses key concerns of food wastage and optimal utilisation of resources so that no farm produce goes to waste.

A greener tomorrow

The environmental benefits are equally impressive. The increased usage of ethanol-blended petrol has led to a reduction of 698 lakh tons of carbon dioxide emissions, not only helping India technologically live up to its climate commitments, but bluer skies for its citizens. With states like Uttar Pradesh, Maharashtra, and Karnataka already reaching 20% blending, it is a great model for other states to follow suit.

This emphasis on ethanol by India has been a sign of aspirational policy making and successful implementation.

It is an amazing story of how an energy policy can uniquely help solve important national challenges like energy independence, economic recovery, and environmental protection, while radically changing the lives of millions of farmers. This is not just about fossil-fuels, it is about creating a self-sufficient, prosperous, and greener India, where the same hands that feed the nation, fuel it.

The author is CEO- Zuari Envien Bioenergy Pvt. Ltd. (ZEBPL)

Published on August 9, 2025

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}