As the Department Of Food And Public Distribution (DFPD) gas allowed grain-based distilleries to participate in the e-auctions by the Food Corporation Of India (FCI) for rice procurement of up to 23 lakh metric tonne, Icra has expected that this move is likely to support the increase in ethanol blending.
As per Icra, this move is also expected to support the profitability margins of multi-feed or grain-based distilleries, since FCI rice is available at a lower rate and provides higher yield than damaged food grains (DFG) or maize.
Contribution from grain-based distilleries surpassed 50 per cent of India’s ethanol production for the first time in the last few months. With the removal of the cap as well as allowance of FCI rice supporting ethanol capacities, the blending is likely to reach its 20 per cent mark in Ethanol Supply Year 2025 (ESY2025),” as stated in the Icra report.
As far as the current fiscal is concerned, ethanol production capacity has increased to 1,589 crore litre from 1,380 crore litre in ESY2023. In order to achieve 20 per cent blending by 2025, an ethanol production capacity of 1,700 crore litre is required to be in place by 2025, considering the plants would operate at 80 per cent efficiency and taking into account the requirement of ethanol from other sectors, as per Icra.
India achieved an ethanol blending ratio of 15.80 per cent in July 2024 while the cumulative ethanol blending from November 2023 to July 2024 stood at 13.3 per cent. 647 crore litre of ethanol has been contracted for ESY24, of which 461 crore litre have been supplied till July 2024.
Icra has highlighted a few key challenges for the sector which include the issue of ethanol availability across states, availability of proper infrastructure as well as timely adoption of E20 compliant vehicles. The Indian Sugar & Bio-Energy Manufacturers Association (ISMA) projects gross sugar production to fall to 33.3 million MT in Sugar Year 2025 (SY2025) from 34 million MT in SY2024. After considering the ethanol diversion of 4 million MT, the net sugar production is expected to decline to 29.3 million MT in SY2025, as per the report.
