India's Ethanol Blending Programme: Balancing Energy Security with Water, Sustainability and Economic Efficiency

Prepared by Prerna for IAS for SAMKALP STUDENTS

India's Ethanol Blending Programme: Balancing Energy Security with Water, Sustainability and Economic Efficiency

(Based on Article in INDIAN EXPRESS   dated 7th August 2026a and on Government of India policies, Ministry of Petroleum & Natural Gas, Ministry of Consumer Affairs, Food & Public Distribution, NITI Aayog, CACP, and recent policy discussions)

Introduction

India has emerged as one of the world's fastest-growing biofuel economies through its Ethanol Blended Petrol (EBP) Programme. Ethanol blending has increased from about 1.5% in 2013-14 to nearly 20% in 2025, making India one of the few countries to achieve such rapid expansion. The programme supports Atmanirbhar Bharat, reduces crude oil imports, improves farmers' incomes and contributes to climate goals. However, as India moves towards higher ethanol blends, issues relating to water use, sustainability, food security and long-term economic efficiency require equal attention.

I. History, Background, Composition and Production

India launched the National Policy on Biofuels (2009), which was comprehensively revised in 2018 and amended in 2022. Initially, ethanol was produced mainly from C-heavy molasses, a by-product of sugar manufacturing. Subsequently, the Government permitted production from B-heavy molasses, sugarcane juice, damaged food grains, surplus rice held by the Food Corporation of India (FCI), maize and other approved feedstocks.

The Government advanced the target of achieving 20% ethanol blending (E20) from 2030 to 2025-26. According to official data, annual ethanol supply has increased from about 38 crore litres in 2013-14 to around 700 crore litres by 2025, reflecting one of the fastest expansions of biofuel production globally.

II. Necessity of Ethanol Blending

India imports nearly 85% of its crude oil requirement, making energy security a strategic concern. Ethanol blending serves several important objectives.

It reduces dependence on imported petroleum, lowers the country's import bill and improves the trade balance. It provides an additional market for sugarcane and grain farmers, helping stabilise agricultural incomes. Ethanol also supports India's commitments under the Paris Agreement by reducing greenhouse gas emissions. Higher octane value improves combustion efficiency, while domestic biofuel production strengthens resilience against global oil price shocks arising from geopolitical crises.

III. Domestic Economic and Political Consequences

The Ethanol Blending Programme has generated substantial economic benefits.