In the past decade, India’s sugar mills have generated over Rs 1 lakh crore in revenue from the sale of ethanol. This growth has been driven by a series of policy changes and the government’s support for the diversion of excess sugarcane towards ethanol production.
According to the Department of Food & Public Distribution (DFPD), sale of ethanol has resulted in better cash flows for sugar mills resulting in prompt payment to cane farmers. In last 10 years (2014-15 to 2023-24), sugar mills have earned revenue of more than Rs 1 lakh crores from sale of ethanol which has improved the financial condition of sugar mills.
In years of surplus sugarcane production, when prices are depressed, the sugar industry struggles to make timely payments to farmers for cane prices. To address the issue of excess sugar and improve the liquidity of sugar mills, the government is encouraging mills to divert surplus sugarcane to ethanol production, helping them clear cane dues on time. Indian Government has been implementing Ethanol Blended Petrol (EBP) Programme throughout the country wherein Oil Marketing Companies (OMCs) sell blended petrol. Under EBP Programme, Government has fixed the target of 20% blending of ethanol with petrol by 2025.
Till year 2014, ethanol distillation capacity of molasses-based distilleries was less than 200 crore litres. Supply of ethanol to OMCs was only 38 crore litres with blending levels of only 1.53 % in ethanol supply year (ESY) 2013-14. However, in past 10 years due to the policy changes made by the Government, the capacity of molasses-based distilleries and grain-based distilleries have increased to 941 crore litres and 744 crore litres respectively.
In the ESY2023-24, blending has reached 14.6%, a significant achievement in the drive toward greener energy. The sale of ethanol has not only improved the financial health of sugar mills but also resulted in timely payments to farmers.
Government is committed to meet its goals regarding reduction of emissions of Green House Gases (GHGs). Use of ethanol blended petrol reduced emission of Carbon Mono Oxide and other hydrocarbons. In-fact, increasing use of ethanol in transportation will switch Indian transportation sector to be greener and environment friendly.
As a result of the effective government policy, investment opportunities worth over Rs 40,000 crore emerged, leading to the establishment of new distilleries in rural areas and contributing to direct and indirect employment generation.
