Industry urges government to push ethanol blending beyond 20%

As the quest for decarbonisation and increasing use of green energy is spiralling up, the Indian Sugar & Bio-Energy Manufacturers Association (ISMA) and the Indian Federation of Green Energy (IFGE) have jointly urged the government to announce a National Ethanol Mobility Roadmap that charts India’s ethanol blending goals beyond the current 20% (E20) target. The proposed roadmap would set clear milestones for achieving up to 27% (E27) blending and provide long-term policy certainty for the biofuel sector.

ISMA and IFGE have also sought GST rationalisation for Flex-Fuel and Smart Hybrid Vehicles—currently taxed at 43%—and have recommended consumer incentives similar to those under the FAME scheme for electric vehicles. They argue that lowering taxes and providing incentives will accelerate adoption of ethanol-compatible vehicles, sustaining the momentum of India’s clean fuel transition.

India’s sugar industry has invested more than Rs 40,000 crore in ethanol capacity, producing more than 9,000 million litres annually from sugarcane alone. “We are fully equipped to support blending up to E27 and beyond,” said ISMA Director General Deepak Ballani, adding that a clear roadmap would optimise existing capacity, ensure stable returns for sugarcane farmers, and boost rural economies.

For the ethanol supply year 2025–26, ethanol producers have offered 17,760 million litres, far exceeding the oil marketing companies’ requirement of 10,500 million litres. Without a higher blending target, industry leaders warn that large capacities could remain underutilised. Grain-based ethanol manufacturers—who rely on rice and maize—have also urged the government to expand blending targets, warning that plants running at half capacity may become unviable.

India currently has around 17,000 million litres of ethanol production capacity, supported by over 400 units. The success of achieving E20 blending ahead of schedule highlights India’s leadership in biofuel adoption. Industry experts say a forward-looking mobility roadmap will help integrate ethanol into transport fuels, promote advanced biofuels like 2G and 3G ethanol, and reinforce India’s position in global clean energy innovation.

Grain-based ethanol producers, represented by the Grain Ethanol Manufacturers Association (GEMA), echoed similar concerns, noting that plants using rice and maize are running at just 50% capacity. They have also called for a temporary freeze on new investments to prevent market oversupply.

The organisations have also urged the government to rationalise the 43% GST on flex-fuel and hybrid vehicles, bringing it in line with electric vehicles at 5%. Such incentives, they argue, would make ethanol-compatible vehicles more affordable and strengthen India’s clean energy transition.

Ashwini Srivastava, Joint Secretary, Department of Food & Public Distribution, has also held that India now has the production capacity to exceed 20% ethanol blending.