India’s ethanol push could unlock strong demand for sugar, biofuel firms: ISMA
India could generate up to 300 crore litres of additional ethanol demand if E25 blending is adopted, according to Indian Sugar & Bio-energy Manufacturers Association. Industry executives said existing capacity is underutilised, while flex-fuel vehicle expansion and higher ethanol prices remain crucial for sector growth.
India’s push towards higher ethanol blending could unlock as much as 300 crore litres of additional demand, offering a significant growth opportunity for sugar mills and biofuel producers that are currently operating with underutilised capacity, industry executives said.
The optimism follows the government’s latest move to support higher ethanol blends, which industry participants see as another step towards expanding the country’s biofuel programme. Deepak Ballani, Director General of the Indian Sugar & Bio-energy Manufacturers Association (ISMA), said the policy creates a roadmap for increased blending and stronger ethanol consumption in the future.
According to Ballani, India already has enough capacity to meet higher blending targets. The sugar industry alone has an ethanol production capacity of nearly 900 crore litres, much higher than current allocations. If the government moves to E22 blending, it could create demand for an additional 120 crore litres of ethanol. A shift to E25 could be even more significant. (The “E” number indicates the percentage of ethanol mixed with petrol by volume)
“If it moves to E25, it will unlock almost 300 crore litres of additional demand,” Ballani said.
The industry’s immediate challenge is not building new plants but improving the utilisation of existing facilities. Vijay Nirani, Managing Director of TruAlt Bioenergy, said producers have already invested heavily in capacity creation but have struggled with demand and offtake in recent quarters.
“With all these notifications, there’s a good opportunity for the volume growth or capacity utilisation,” Nirani said.
The latest policy measures could also make ethanol-blended fuels more attractive for consumers. Industry executives noted that excise-duty benefits on higher blends may eventually translate into lower fuel costs, while also helping India reduce crude oil imports and improve environmental outcomes.
However, the long-term success of higher ethanol blends will depend on the rollout of flex-fuel vehicles. Ballani said ethanol demand will increase gradually as more automobile manufacturers launch vehicles capable of running on higher ethanol blends such as E85.
Industry leaders are also urging the government to revise ethanol procurement prices. While the Fair and Remunerative Price (FRP) paid to sugarcane farmers has risen by nearly 20% over the past few years, ethanol prices linked to sugarcane-based feedstocks have remained largely unchanged.
“There has to be a corresponding increase in the cost of ethanol from specially the sugar cane juice and B-heavy,” Ballani said, adding that the industry is in discussions with the government on the issue. (B-heavy molasses is a sugar-rich byproduct of sugar production used to make ethanol)
For now, producers see the government’s latest ethanol measures as a positive signal. With surplus capacity already in place, higher blending targets could help improve plant utilisation, boost demand and strengthen the economics of ethanol production across the sugar and biofuel sectors.
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Source : CNBC Tv18
