Ethanol blending saved India Rs 1.9 lakh crore in forex since 2014-15, says govt amid row over E20 fuel

The Centre on Friday strongly defended its ethanol-blended petrol (EBP) programme amid concerns over engine performance, fuel efficiency and potential vehicle damage, asserting that the initiative has delivered significant economic, environmental and agricultural benefits while reducing India's dependence on imported crude oil.

According to a PTI report, speaking at a conclave organised by the Grain Ethanol Manufacturers Association (GEMA), Ashwani Srivastava, Joint Secretary in the Ministry of Consumer Affairs, Food and Public Distribution, said the ethanol blending programme has transformed India's agricultural and energy landscape by creating new markets for farmers, strengthening the sugar industry and generating substantial foreign exchange savings.

Rs 1.9 lakh crore forex savings

Srivastava said the programme has helped India save more than Rs 1.90 lakh crore in foreign exchange between 2014-15 and 2026 by replacing imported crude oil with domestically produced ethanol.

"Ethanol-blended petrol (EBP) programme has resulted in saving of more than Rs 1.90 lakh crore of foreign exchange with the substitution of more than 310 lakh tonnes of crude oil from ethanol supply in 2014-15 up to 2026. Besides, it has also led to a net CO2 reduction of approximately 930 lakh tonne," PTI quoted him as saying.

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Srivastava said the programme has assumed a central role in India's agricultural economy by providing an additional avenue for the utilisation of surplus crops while simultaneously contributing to the country's energy security objectives.

Sugar industry sees turnaround

Highlighting the impact on the sugar sector, Srivastava said ethanol production has significantly improved the financial health of sugar mills and ensured more timely payments to sugarcane farmers.

He noted that between 2014-15 and 2020-21, the government spent nearly Rs 14,600 crore on subsidies for sugar mills, including incentives to export excess sugar stocks. However, the need for such support has largely disappeared as surplus sugar is now being diverted towards ethanol production.

As a result, outstanding dues to sugarcane farmers have fallen to their lowest levels, making the sector more sustainable, he said.

Maize emerges as key ethanol feedstock

The official also highlighted a shift in the ethanol supply chain, with maize overtaking traditional sugarcane-based feedstock as the dominant source of ethanol production.

Srivastava said maize accounted for 47 per cent of ethanol supplied to oil marketing companies during 2024-25 and 36 per cent of supplies in the current ethanol year.

The trend, he said, has improved returns for maize growers and expanded opportunities for grain-based ethanol producers.

India's ethanol production capacity has increased sharply over the past decade, rising from about 21 crore litres in 2013-14 to nearly 2,000 crore litres at present, he added.

Boost amid rising oil prices

Srivastava said the benefits of ethanol blending have become even more relevant amid volatile global energy markets and rising crude oil prices linked to geopolitical tensions in West Asia.

He reiterated that the 20 per cent ethanol blending target has helped reduce crude oil imports, lowering the country's import bill while also contributing to a substantial reduction in carbon emissions.

More broken rice available for ethanol

Referring to a recent Cabinet decision, Srivastava said the government has reduced the permissible broken-grain content in rice distributed under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) from 25 per cent to 10 per cent.

The move will improve rice quality for more than 50 crore beneficiaries under the public distribution system while generating additional quantities of broken rice for industrial use, including ethanol production, he said.

Flex-fuel push

The government is also betting on the wider adoption of flex-fuel vehicles (FFVs), which can operate on ethanol blends ranging from E20 to E100.

Srivastava said the planned introduction of E85 fuel and the expansion of FFVs would offer consumers greater fuel choices while supporting the next phase of India's ethanol blending roadmap.

Industry dismisses concerns

Responding to concerns that higher ethanol blends could damage vehicle engines or reduce mileage, GEMA President C K Jain said the programme was introduced only after extensive scientific evaluation and testing.

He said studies on E20 fuel were conducted over four years between 2014 and 2018, involving long-distance vehicle trials under different operating conditions.

"The result showed that E20 is safe for all engines. Then it was executed and implemented after technical studies, pilot projects, policy discussions, and not in haste," Jain said.

Calling for evidence-based discussions on the issue, he urged critics to focus on verified data rather than assumptions.

"There should always be healthy discussions, but the discussions should be on facts, not myths," he said.

Jain argued that the sector's biggest challenge today is not production capacity but public perception.

He noted that India has invested around Rs 14 billion in ethanol production infrastructure and called for a clearer roadmap beyond the E20 blending target to provide long-term certainty for farmers and industry stakeholders.

The government's defence of the programme comes amid an ongoing debate over the impact of ethanol-blended fuel on vehicle performance, with policymakers and industry representatives maintaining that the benefits to farmers, energy security and the environment outweigh concerns raised by some consumers and experts.

With inputs from agencies