The government’s ethanol blending programme has helped timely payment of cane arrears to farmers and made the sugar industry financially viable, a food ministry official said on Friday.He said that blending 20% of ethanol with petrol, has helped the country save foreign exchange worth Rs 1.9 lakh crore as the country is importing less oils.
“Currently sugarcane arrears (paid to farmers) have reached a lowest level. While during 2014-2021, `14,600 crore was allocated to mills as sugar exports subsidy, but after 2021, no subsidy has been provided because of diversion of surplus sugar into ethanol manufacturing,” Ashwini Srivastava, joint secretary, department of food and public distribution, said at the Grain Ethanol Manufacturers Association (GEMA) conclave 2026.
Noting that maize has emerged as the single biggest feedstock surpassing traditional sugarcane for ethanol manufacturing, Srivastava said in 2024-25 ethanol supply year (ESY, November-October), 47% of ethanol supplied was from maize. In the current ESY so far, 36% of total ethanol supplied to oil marketing companies (OMCs) was from maize.
Srivastava said that with the recent decision of the government to reduce broken rice supplied under Pradhan Mantri Garib Kalyan Anna Yojana from 25% to 10%, will ensure more broken rice available for industrial use including ethanol manufacturing.
India has achieved 20% ethanol blending with petrol, five years ahead of the earlier target of 2030 by making sure ethanol is produced from sugarcane, maize and a variety of other feedstocks.
Srivastava also stated that the recent government initiative of introducing E85 high ethanol blended fuel with 80- 85% of ethanol and 14-19% petrol specifically for the flex-fuel vehicles (FFVs) will accommodate higher ethanol concentration influence and boost consumer adoption of FFVs.
At present, OMCs procure 11,000 – 12,000 million litres of ethanol made from sugarcane, rice and maize annually for 20% blending with petrol while the existing manufacturing capacity is of around 17,000 million litres. In the 2025-26 ethanol supply year, the OMCs have agreed to lift 10,500 million litres of ethanol, out of which 7500 million litres is to be contributed by the grain based biofuel markers while the rest is being sourced from sugarcane based units.
Currently out of the total 400 ethanol manufacturers, around 250 units are grain based (rice and maize).