Argus Media | Eye on blending, India to raise sugar in ethanol output

Mar 09,2023

India will divert 5mn t of sugar for ethanol production during 2022-23, up from 3.6mn t in 2021-22, the ministry of consumer affairs, food and public distribution said. The government plans to divert over 6mn t of excess sugar to ethanol output by 2025.

India is on target to achieve 12pc ethanol blending in gasoline during the December 2022-November 2023 ethanol season, with 11.43pc already achieved, additional secretary in the food ministry Subodh Kumar said earlier this week. This is up from 1.5pc in 2013-14 and 10.2pc in 2022.

India's total ethanol requirement from sugar mills will be fulfilled this season, Kumar said, adding that the ethanol sector has received investments of 200bn rupees ($2.44bn) so far.

Sugar mills and distilleries earned Rs200bn rupees from the sale of ethanol during 2021-22, and this revenue is forecast to rise to Rs250bn in 2022-23 following the increase in diversion of sugar for ethanol production, the ministry said.

The ethanol production capacity of molasses and sugar-based distilleries rose to 7bn litres/yr in 2021-22, with capacity continuing to increase to meet the country's target of 20pc blending of ethanol in gasoline (E20) by 2025, the ministry added.

India's current ethanol production capacity is 9.47bn litres/yr, according to government estimates in December 2022, with 6.19bn l/yr coming from molasses and 3.28bn l/yr from grain.

India's prime minister Narendra Modi launched E20 fuel at 84 retail outlets of oil marketing companies in 11 states and union territories on 6 February. "In the first phase [of E20 roll out], 15 cities of the country will be covered and it will be expanded across the country in the next two years," Modi said, without identifying the cities. This came months after Indian oil minister Hardeep Singh Puri announced pilot sales of E20 gasoline.

Increased ethanol blending in gasoline is also in line with India's target of achieving net zero emissions by 2070. Ethanol blending of 20pc reduces emissions of carbon monoxide and hydrocarbons by around 20pc, according to a report by government think-tank Niti Aayog in 2021. The country's Goods and Services Tax council had in December 2021 cut taxes on ethanol blending to 5pc from 18pc, which could also boost use of ethanol.