Grain-based ethanol makers seek cap on new investments
Grain-based ethanol makers have urged the government to halt fresh investments in new units until a clear long-term blending roadmap is set. They warned of overcapacity, as current production capacity exceeds demand. The industry also seeks higher procurement prices from OMCs to match rising feedstock costs like maize and rice.
Grain based ethanol makers have sought a cap on further investment in the sector, till the government makes a long term roadmap for future expansion of ethanol blending programme.
“We have urged the government to discourage giving investment approval and banks loans for the additional grain based ethanol manufacturing facilities as it may lead to overcapacities,” Chandra Kumar Jain, president, Grain Ethanol Manufacturers Association, told FE.
Jain said that a clear roadmap for higher ethanol blending should be set before granting approval for the new bio-fuels manufacturing units.
Grain-based units dominate India’s ethanol production
While industry has set up a capacity of manufacturing 1700 crore litres of ethanol at present, oil marketing companies (OMCs) buy around 1100 crore litres annually from them.
Currently out of the total 400 ethanol manufacturers, around 250 units are grain based (rice and maize). Rest of the units manufacturer ethanol from sugarcane.
Because of thrust given on the blending programme, from just 1.6% of ethanol blending programme in 2013-14, the blending of biofuels has increased to around 20% at present.
The ethanol makers from grain have also urged the government to increase procurement prices by oil-marketing companies with corresponding rise in feed stocks prices such as rice and maize prices rises. Jain said that with the corresponding rise in minimum support price (MSP) of maize, OMCs should also increase their procurement prices.
During November, 2024 – August, 2025, out of 821 crore of ethanol supplied to OMCs in ethanol supply year (ESY) 2024-25 (Nov-Oct), 526 crore litres are manufacture from grain sources from surplus FCI rice (96 crore litres), damaged food grains (63 crore litres) from the market or broken rice. Over 367 crore litres of ethanol manufactured using maize.
OMCs ethanol pricing
In the current ESY – 2024-25 , OMCs pay units Rs 71.86/litre to ethanol markers for maize, while for bio-fuel manufactured for Food Corporation of India’s rice is Rs 58.5/litre and Rs 60/litre for ethanol manufacture from broken rice unfit for the human consumption.
Out of total 1100 crore litres, grain based units have long term offtake agreements with oil marketing companies for the buy back agreement for 600 crore litres of ethanol. However 300 to 350 crore litres of ethanol supplied by units to OMCs are not back by long term offtake.
Around 450 crore of ethanol is manufactured from the sugarcane based units.
In 2022, under the amended National Policy on biofuels 2018, had advanced the target of 20% blending of ethanol in petrol from 2030 to ESY 2025-26.
According to an official note, the ethanol blending programme has resulted in payment to farmers of more than Rs 1.25 lakh crore from 2014-15 ESY till July 2025. In addition the programme has led to savings of more than Rs 1.44 lakh crore in terms of foreign exchange as the country imposes large quantities of crude oils.
Grain-based ethanol manufacturers across Punjab, Haryana, Uttar Pradesh, Maharashtra, Madhya Pradesh, Bihar, West Bengal and Tamil Nadu currently using maize or rice as main feed stock.
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Source : Financial Express
