High Costs, Weak Infrastructure Challenge Ethanol Blending Push

New Delhi, Jun 9 (KNN) India’s ambitious plan to scale up ethanol blending in petrol to 20 per cent (E20) by 2025 is facing growing headwinds, as stakeholders raise concerns over costs, infrastructure, and vehicle compatibility.

The Indian Sugar Mills Association (ISMA) has called for a significant price hike in procurement of cane-based ethanol—from the current Rs 65.61/litre to Rs 69.85/litre—asserting that this adjustment is critical to attract investment.

According to ISMA, achieving the 20 per cent blending target will demand an additional 800 crore litres, requiring around Rs 17,500 crore in distillery capacity expansion.

Automobile manufacturers, meanwhile, have urged government support for the transition to higher ethanol blends. They argue that E20 requires design adaptations for engines and fuel systems, alongside compatibility testing.

Without pricing support or tax incentives—especially for flex-fuel technologies—addressing higher fuel consumption and infrastructure costs will be challenging.

Beyond pricing, there are bottlenecks in production and logistics. While ethanol blending rose from around 8 per cent in 2021 to 15 per cent in May 2025, experts caution that storage, transport, and blending infrastructure remain inadequate, limiting nationwide rollout.

Moreover, the current unease over E20 readiness was underscored by industry reports indicating that India will likely fall short of meeting total ethanol requirements without scaling up both sugarcane and grain-based production—or resorting to imports.

The environmental and food-security trade-offs also loom large. Diverting food grains such as maize and rice to ethanol may raise inflation concerns, while sugarcane remains water-intensive—a potential burden on agriculture.

(KNN Bureau)