Ethanol can reduce farmers’ MSP dependence, retain wealth within India: BIEPA president
BIEPA said ethanol production strengthens India’s energy security, creates demand for maize and surplus grains, and reduces crude oil imports. The industry called for fairer ethanol allocation, tax incentives for E85/E100 vehicles, and stressed existing capacity can support higher ethanol blending beyond E20.
Ethanol production can help India retain wealth that would otherwise flow to energy-exporting countries while creating a market-led alternative to repeatedly increasing minimum support prices for farmers, Pushpinder Singh, president of the Bharat Independent Ethanol Producers Association, told Moneycontrol.
“Ethanol is leading to the development of the country. It is retaining the wealth which was leaking to countries exporting oil and lithium batteries to India,” Singh said. He argued that creating steady industrial demand for crops such as maize could make agriculture more sustainable by allowing companies to purchase produce at remunerative prices.
“Raising MSPs every year is not sustainable. You have to create demand for the product and make it economically viable for the industry to purchase it at a remunerative price,” he said.
Singh said the ethanol-blending programme had helped address multiple challenges, including delayed payments to sugarcane farmers, surplus and damaged foodgrain stocks, India’s dependence on imported crude, and the need to generate employment in rural areas.
The industry has expanded rapidly as India moved from ethanol blending of around 1.5 percent to 20 percent, he said, adding that existing production capacity was sufficient to support a shift towards E30.
“The recent misinformation campaign has created some short-term anxiety, particularly because social media can amplify unverified negative claims very quickly. However, the industry’s confidence remains intact. Ethanol blending is backed by scientific evidence, OEM approvals, and a strong national policy objective. We believe facts, real-world experience, and consumer awareness will outweigh misinformation, and the long-term growth trajectory of India’s ethanol programme remains unchanged,” said Akshay Modi, joint vice president BIEPA.
However, utilisation levels vary sharply across states. Plants in Tamil Nadu, Assam, Gujarat and Rajasthan were operating at close to full capacity, while those in Madhya Pradesh, Karnataka, Bihar and West Bengal were operating at only 20-25 percent, Singh claimed.
He called for a more equitable system for allocating ethanol orders among producers, arguing that plants without long-term offtake agreements were being disadvantaged despite being established under government-supported interest-subvention schemes.
“The allocation mechanism needs to be redone. There should be equitable allocation of ethanol so that all plants can survive,” he said.
Lower taxes needed for E85 adoption
Singh also backed stronger fiscal incentives for flex-fuel vehicles and fuels with a higher ethanol content.
The government should consider reducing the goods and services tax on E85 and E100 vehicles to narrow their price difference with conventional vehicles, he said. The retail price of E85 and E100 fuel should also be made more attractive to compensate consumers for the reduction in fuel efficiency associated with higher ethanol blends.
“For the penetration of E85 and E100 vehicles, a policy push is required on two aspects. One is reducing GST on vehicles, and the second is incentivising the price of the fuel,” Singh said.
While acknowledging that ethanol has a lower energy density than petrol, Singh said the mileage impact of E20 was limited to around 2-5 percent. He rejected claims that the fuel could cause widespread engine damage, maintaining that vehicle manufacturers build sufficient tolerance into engine designs to accommodate different fuel blends.
In older vehicles, some rubber components such as gaskets and hoses could require earlier replacement, he said, but maintained that ethanol did not damage major metallic or plastic engine components.
The claims over vehicle compatibility have emerged as a key source of consumer concern amid the nationwide transition to E20 petrol, particularly for owners of vehicles that were not explicitly certified for the blend.
Grain-based ethanol dominates supply
Public-sector oil marketing companies require around 1,200 crore litres of ethanol annually to achieve 20 percent blending, according to Singh.
Of this, about 350 crore litres comes from the sugar industry through sugarcane juice and molasses. The remaining 850 crore litres is supplied by grain-based distilleries, with rice and maize each contributing roughly half of the grain-based supply, he said, while admitting that he did not have the precise feedstock-wise figures.
Singh said the government was increasingly promoting maize because it requires less water than rice and sugarcane and is commonly used for ethanol production in markets such as the United States.
Singh rejected concerns that the ethanol programme would necessarily threaten food security, arguing that much of the fuel was produced using molasses, damaged grains and surplus stocks.
According to Singh, some of the rice being supplied to ethanol producers in 2026 had been procured in 2023, highlighting the storage challenges faced by the government.
Water-use concerns
Singh also disputed claims that producing one litre of ethanol directly required thousands of litres of water.
He said ethanol plants were allowed to consume only around four litres of process water for each litre of ethanol under their environmental approvalsSingh argued that ethanol should instead be viewed as a way of adding value to surplus crops and agricultural by-products.
Rather than exporting surplus rice as a raw agricultural commodity, India could convert it into ethanol for domestic use or exports, generating employment and saving foreign exchange, he said.
He also criticised groups opposing the ethanol programme, describing some of the campaigns as an attempt to derail India’s drive towards greater energy self-reliance.
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Source : Moneycontrol.com
