To ensure the Ethanol Blending Programme succeeds, the government must standardise state-level taxes and educate consumers to resolve lingering doubts about the fuel.
To accelerate its Ethanol Blending Programme (EBP) by granting complete excise duty exemptions on higher ethanol-blended petrol variants — specifically targeting E22, E25, E27, and E30 blends – the Centre is establishing a financial and technical framework designed to curb India’s reliance on expensive crude oil imports. However, this may not be enough.
State tax alignment crucial for consumer benefits
Bharati Balaji, Deputy Director General of the All India Distillers’ Association (AIDA), told businessline that excise exemptions provide a vital commercial route for surplus ethanol capacity, which currently exceeds E-20 programme requirements. AIDA is urging state governments to align tax structures to ensure benefits reach consumers, while actively collaborating with the Ministries of Petroleum & Natural Gas, Road Transport, and Food to address concerns regarding reduced fuel efficiency, she said.
“Consumer awareness is a vital pillar for the long-term success of India’s ethanol blending program. Historically, introducing new products to the Indian market triggers immediate resistance, as seen when chemical manufacturers protested molasses procurement during the program’s initial rollout. These challenges are simply standard, temporary hurdles,” she said.
Addressing mileage concerns around higher ethanol blends
Balaji emphasised that consumer awareness is vital, noting that while ethanol’s lower energy content might slightly reduce fuel mileage, the issue must be viewed through a broader lens. She urged a focus on overall vehicle technology, efficiency, carbon emissions, running costs, energy security, and environmental benefits.
“The minor mileage drop we are talking about applies to vehicles built before 2023,” she said, adding that “It is important to note that modern vehicles are designed and calibrated for E20. In fact, they are engineered to optimize performance, emissions, and fuel efficiency under higher ethanol blends.”
Ethanol capacity and demand landscape
On feedstock, Balaji explained that AIDA members—comprising top grain, molasses, and integrated distilleries—control about 80 per cent of India’s ethanol production. She highlighted that fuel ethanol is a substantial, fast-growing part of the distillery ecosystem, driven by market demand and government policy.
Explaining the capacity metrics, Balaji noted that India’s current installed ethanol capacity stands close to 2,000 crore litres. With the Ethanol Blending Programme (EBP) requiring 1,100 crore litres and alternative sectors—including potable alcohol, pharmaceuticals, and chemicals—consuming 334 crore litres, total demand reaches 1,434 crore litres. This leaves the industry sitting on a notable surplus capacity of approximately 566 crore litres.