Foreign Exchange Saved: Ethanol Programme Boosts Farmer Income and Reserves Nation's Wealth, Govt Says

Foreign Exchange Saved: Ethanol Programme Boosts Farmer Income and Reserves Nation's Wealth, Govt Says​

The government strongly defended its ethanol-blended petrol (EBP) programme on Friday, citing substantial savings in foreign exchange and the significant positive impact on India's agricultural economy. Addressing a conclave by the Grain Ethanol Manufacturers Association (GEMA), officials asserted that the scheme is key to reducing dependence on imported crude oil while simultaneously boosting sugarcane farmers' incomes.

The EBP initiative has reportedly resulted in saving over Rs 1.90 lakh crore of foreign exchange. This achievement is attributed to the substitution of more than 310 lakh tonnes of crude oil with ethanol supply between 2014-15 and the projected period ending 2026. The programme has also led to a net CO2 reduction estimated at approximately 930 lakh metric tonnes.

Ethanol's Impact on the Agricultural Economy​

Ashwani Srivastava, Joint Secretary in the Food Ministry, highlighted how ethanol production has become central to India's agricultural ecosystem. He stated that the program creates vital new markets for surplus crops, moving beyond traditional uses. The scheme ensures timely payments to cane growers and has helped stabilize the sugar industry financially.

Srivastava noted that arrears owed to sugarcane farmers are currently at their lowest recorded level. This contrasts sharply with earlier periods where export subsidies were necessary. Between 2014-15 and 2020-21, the Centre disbursed about Rs 14,600 crore in subsidies to sugar mills. Currently, this is not required as mills redirect surplus sugar toward ethanol production.

Shift Towards Maize and Production Capacity Growth​

A significant trend identified by officials is the growing prominence of maize as a feedstock for ethanol production. While traditionally focused on sugarcane-based fuel, maize now constitutes 47 per cent of supplies to oil marketing companies in 2024-25. This shift has been beneficial to maize farmers, allowing them better realization for their crops.

India's capacity in this sector has grown dramatically since its inception. Ethanol production capacity expanded from approximately 21 crore litres in 2013-14 to around 2,000 crore litres presently. The government continues to support the transition through initiatives like the planned roll-out of E85 fuel and the promotion of flex-fuel vehicles (FFVs), capable of running on blends from E20 to E100.

Industry Rebuts: Addressing Concerns Over Vehicle Safety​

GEMA President C K Jain provided a strong defense of the ethanol programme, asserting that it was not a rushed decision but the outcome of extensive research. He recounted that research into the E20 blend spanned four years, from 2014 to 2018. This involved driving vehicles 200,000 km on conventional fuel and another 200,000 km after switching to E20.

Jain confirmed that the results demonstrated E20's safety for all engines, ensuring the program was executed only after thorough technical studies and pilot projects were completed. He urged stakeholders to base discussions on facts rather than misconceptions regarding fuel integrity.

Government Push and Future Clarity​

The government is also integrating other agricultural outputs into ethanol production pathways. A recent Cabinet decision involves reducing the permissible broken-grain content in rice supplied under the Pradhan Mantri Garib Kalyan Anna Yojana, from 25 per cent to 10 per cent. This change ensures that additional broken rice generated during milling remains available for industrial use, including ethanol production.

While acknowledging the program's successes, Jain called for greater clarity on the long-term road map extending beyond E20. He stated that providing a clear path would significantly help in improving farmer productivity within the sector.