Ethanol Blending Programme Shifts from Sugar to Grain

The ethanol blending programme in India, initially aimed at supporting sugar mills, has seen a major shift towards grain-based ethanol production by 2025. The government’s policy incentives and changing agricultural conditions have transformed the fuel ethanol sector. The blending ratio in petrol has steadily increased, with maize and other grains now dominating ethanol supply.

Origins and Early Development

The programme began to help sugar mills pay farmers by creating extra revenue from ethanol made from molasses. Initially, ethanol was produced only from C-heavy molasses, a low-sucrose byproduct. From 2018-19, production expanded to include B-heavy molasses and direct cane juice. The government offered higher prices for ethanol from these sources to compensate mills for reduced sugar sales.

Growth in Ethanol Supply and Blending

Between 2013-14 and 2018-19, ethanol supply to oil marketing companies (OMCs) rose from 38 crore litres to 189 crore litres. The average blending in petrol increased from 1.6% to over 4.9%. This growth helped reduce oil imports and supported farmers’ incomes.

Introduction of Grain-Based Ethanol

Since 2018-19, the government fixed separate prices for ethanol from rice, maize and damaged foodgrains. Sugar mills installed multi-feedstock distilleries to produce ethanol from grains in the off-season. Grain-based ethanol distilleries emerged in several states, using surplus and broken grains, including stocks from the Food Corporation of India (FCI).

Dominance of Grain Ethanol by 2023-25

By 2023-24, ethanol blending reached 14.6%. Of 672 crore litres procured, only 40% came from sugarcane-based sources. Maize alone contributed more ethanol than all sugarcane feedstocks combined. In 2024-25, grain ethanol supply further increased, with maize accounting for about 420 crore litres out of 920 crore litres total.

Reasons for Shift to Grain

Two main factors drove this shift. First, droughts reduced sugarcane output and ethanol production from B-heavy molasses and cane juice. Second, higher ex-distillery prices for maize ethanol made it more profitable. This led to greater investment in grain-based ethanol production.

Policy and Capacity Challenges

For 2025-26, OMCs invited tenders for 1,050 crore litres of ethanol targeting 20% blending. Distilleries offered 1,776 crore litres, mostly from grain. India now has nearly 500 distilleries with a combined capacity of 1,822 crore litres per year, exceeding blending demand. Technical limits exist on how much ethanol petrol can contain.

Fuel Versus Food Debate

The rise of grain ethanol raises concerns about food security. Maize is a key poultry and livestock feed, and using over 11 million tonnes for ethanol may affect feed availability. Rice ethanol depends on surplus FCI stocks, which may not always be available. Sugarcane faces less pressure since domestic consumption grows slowly, leaving more surplus for ethanol.

Implications for Agriculture and Energy

The ethanol blending programme has diversified India’s biofuel sources beyond sugarcane. It supports farmers of maize and rice but also poses sustainability questions. Balancing fuel production with food and feed needs remains critical as India pursues higher ethanol blending targets.

Questions for UPSC:

1. Critically analyse the impact of biofuel policies on food security in India with suitable examples.
2. Explain the role of ethanol blending in India’s energy security and its challenges in implementation.
3. What are the environmental and socio-economic implications of shifting from sugarcane to grain-based ethanol production?
4. With reference to India, underline the factors influencing agricultural diversification and their effects on rural livelihoods and national economy.

Answer Hints:

1. Critically analyse the impact of biofuel policies on food security in India with suitable examples.

1. Biofuel policies incentivized ethanol production from grains like maize and rice, increasing demand for food crops.
2. Large-scale maize use for ethanol (over 11 million tonnes) risks feed shortages for poultry and livestock sectors.
3. Rice-based ethanol depends on surplus FCI stocks, which may not be consistently available, affecting food reserves.
4. Shift from sugarcane to grains raises the fuel vs food debate, with potential price and availability impacts on staple foods.
5. Policies initially aimed at sugarcane farmers now benefit grain growers, altering crop priorities and land use.
6. Balancing ethanol blending targets with food security requires careful resource management and alternative feedstock exploration.

2. Explain the role of ethanol blending in India’s energy security and its challenges in implementation.

1. Ethanol blending reduces dependence on imported fossil fuels, improving India’s energy security and foreign exchange savings.
2. Blending ratio increased from 1.6% (2013-14) to nearly 20% target by 2025-26, showing policy success.
3. Supply constraints from sugarcane due to droughts necessitated shift to grain-based ethanol to meet blending targets.
4. Excess distillery capacity (1,822 crore litres vs 1,050 crore litres demand) creates economic inefficiencies.
5. Technical limits exist on ethanol blending in petrol (~20%), capping further increases in blending ratio.
6. Price differentials and feedstock availability influence production economics and supply chain stability.

3. What are the environmental and socio-economic implications of shifting from sugarcane to grain-based ethanol production?

1. Grain-based ethanol production intensifies pressure on food crops, raising concerns over food security and land use.
2. Maize ethanol uses feed grains vital for livestock, potentially increasing feed prices and impacting animal protein supply.
3. Sugarcane ethanol has lower food competition but is vulnerable to climate variability (droughts) affecting output.
4. Shift encourages agricultural diversification but may lead to monoculture risks and soil nutrient depletion in grain belts.
5. Socio-economically, grain ethanol benefits maize and rice farmers, creating new rural income streams beyond sugarcane regions.
6. Environmental impacts include water use differences; sugarcane is water-intensive, grain ethanol may reduce water stress but increase fertilizer use.

4. With reference to India, underline the factors influencing agricultural diversification and their effects on rural livelihoods and national economy.

1. Biofuel policies promoting multiple feedstocks (sugarcane, maize, rice) drive diversification in cropping patterns.
2. Price incentives for ethanol from grains encourage farmers to shift from traditional crops to maize and rice for fuel use.
3. Climate variability and droughts reduce sugarcane viability, pushing farmers towards more resilient or profitable crops.
4. Diversification enhances rural incomes by creating new markets (ethanol industry) and reducing dependence on single crops.
5. National economy benefits from reduced oil imports and enhanced rural employment but faces challenges in food security and resource allocation.
6. Infrastructure and investment in multi-feedstock distilleries support diversification but require policy coordination to balance food-fuel needs.