Page 51 - Banking Finance April 2025

ARTICLE

blending ethanol with fossil fuels like petrol is concerned.
The country started blending ethanol with petrol as early
as 1930. Today, the country has mandated a 27% ethanol
percentage in petrol and most of the cars these days in
Brazil run on flex fuels.

The Govt of India initiated the ethanol blending program in
2001 but it has been only in the last few years that the ini-
tiative has gained substantial momentum.

In the year 2013-14, the ethanol percentage in blended
petrol in the country stood at 1.53%. Due to the various
initiatives taken by the government, the blending percent-
age rose to 8.17% in the year 2020-21. There was further
increase in blending percentage in the year 2022-23 with
the figure touching 12.06%. As per the Ministry of Petro-
leum, Govt of India, our country has already achieved 15% Benefits of Ethanol Blending in Recent Years
ethanol blending in petrol as of September 2024. Source: Press Information Bureau, GoI

A National Policy on biofuels was introduced by the Central Some Major GoI Initiatives to Promote
Govt in 2018 and a target of 20% ethanol blending was Ethanol Blending
proposed to be achieved by 2030. The success of the etha-
1) GST on ethanol being used for ethanol blending has
nol blending program in recent years made the govt ad-
been reduced from 18% to 5%, making ethanol produc-
vance the target year for achieving 20% ethanol blending
tion financially attractive.
to 2025 from 2030.
2) The Govt. has amended the Industries(Development &
Regulation) Act, 1951 so that free movement of etha-
nol can take place between different states
3) Interest subvention scheme has been introduced for
ethanol producers, to give a push to ethanol produc-
tion in the country
4) Procurement price for ethanol is fixed by the Govt on
the lines of MSP for food crops
5) Differential pricing mechanism for ethanol has been
introduced, depending upon the raw material used for
its production

The raw materials that are used for producing ethanol used
for blending with petrol are sugarcane, maize, broken rice
etc. In our country, in the FY 2023-24, about 25.1 billion litres
of ethanol was produced from sugarcane, 23.2 billion litres
from maize and 10.2 billion litres from rice/damaged
foodgrains. So, from the above data, it can be said that
Ethanol Blending in Petrol in India sugarcane and maize have been the main raw materials for
Source: Press Information Bureau, GoI producing ethanol used for blending with fossil fuels.

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