Ethanol petrol can save forex worth Rs 2.2k cr

New Delhi, Nov 27 | Updated: Nov 28 2006, 08:59am hrs
Permitting 10% of ethanol blending with petrol throughout the country can lead to a reduction of over Rs 2,200 crore in foreign exchange in Indias import bill during the current fiscal.

According to a paper brought out by industry body Assocham, currently only 5% of blending is allowed and that, too, in nine states. This was insufficient to help curtail the oil import bill as the government had been deferring a decision to raise the present ceiling of 5% blending, stated Assocham.

In India, ethanol is primarily made form molasses, a bi-product of sugar production from sugarcane. The sugar industry, in India, is the second largest processing industry after cotton textiles. There are more then 350 factories with installed capacity of more then 20 million tones of sugar. But in other countries it is also prepared form sugarbet, corn, food grains, etc.

The Assocham paper also emphasised that the minimum 10% ethanol blending with petrol can be effected without incorporating any modifications in vehicles engines and with slight modifications in them, this blending ratio could go up to over 90% and therefore, India should allow liberal ethanol petrol blending.

Assocham president Anil K Agarwal said sugar production has been growing in the country, which by March 2006, stood at 3,004 thousand tonne against its production of 548 thousand tonne in April 2005. This indicates that there are large prospects for ethanol production in the country. The only thing is required is the permission for production of higher ethanol out of sugar cane and its liberal blending with petrol to decrease Indias dependence on oil imports, added Agarwal.

The paper further highlights that Indias oil import bill will grow manifold until corrective measures are taken. From 1999-2000 to 2005-06, the oil import bill has almost doubled by crossing the 99 million tonne mark form 57 million tonne. In 2005-06, the value of Indias oil import bill has crossed Rs 2,00,000 crore, which will further escalate by at least 20% in the current fiscal due to heavy demand of petroleum products for domestic consumer.

The Assocham paper stated that the project for ethanol blending has been implemented in nine states. But there is need to execute it in the entire country. The paper also said that if only 10% of ethanol is blended with petrol (ratio 10:90), India could save around Rs 2257.8 crore worth of foreign exchange by March 31, 2007.

Gradually, the percentage of ethanol could be increased. In 2004, India produced around 1.3 billion litres of ethanol, which increased to around 2.04 billion litres in 2005. But still, India is lagging behind the US and Brazil, which contributes around 70% of the world ethanol production while Indias share in it is at 4%.