India Ethanol & Feedstocks Market - Trend Analysis & Forecast to 2030

India ethanol feedstock market demand reached ** tonnes in 2022 and is projected to grow at a CAGR of **% from 2020 to 2030. India ethanol production capacity stood at 13.80 billion liters as of 2023, with sugarcane molasses accounting for major share as ethanol feedstock. India’s ethanol and ethanol feedstock market has seen significant growth due to increased demand for biofuels and government incentives for clean energy. This growth is driven by ethanol blending programs, agricultural feedstock availability, and strategic partnerships, leading to an evolving competitive landscape with expanding production capacities.

Market/ Product Overview

The ethanol market in India primarily focuses on blending ethanol with petrol to reduce greenhouse gas emissions and reliance on imported crude oil. Ethanol is produced from molasses, sugarcane, and grains such as maize. The government's Ethanol Blending Program (EBP), aiming for 20% ethanol blending by 2030, is a significant driver of market growth. Ethanol's application extends beyond fuel blending, playing a role in beverages, chemicals, and pharmaceuticals. The feedstock market, crucial for ethanol production, includes sugarcane and surplus grains. Increasing ethanol production capacities through new refineries and infrastructure investment ensures steady feedstock demand, with the goal of balancing agricultural productivity and bioenergy needs.

Importance of Bioenergy in India

Bioenergy, including ethanol, is vital for India to meet its energy security and environmental goals. It helps reduce dependency on fossil fuels and greenhouse gas emissions while supporting rural development through agricultural feedstock utilization. Ethanol is a key element of India’s transition to clean energy, contributing to a sustainable energy mix.

Key Drivers of Growth in the India Ethanol & Ethanol Feedstock Market

The growing emphasis on reducing carbon emissions and achieving energy independence is driving the expansion of ethanol production in India. Government mandates, such as the Ethanol Blending Program (EBP), aim to reach a 20% blending target by 2030, creating a robust demand for ethanol. Additionally, increased investments in infrastructure, including ethanol production plants and feedstock supply chains, are fostering market growth. The availability of sugarcane, a key feedstock, and the rise of second-generation ethanol production, derived from surplus agricultural residue, provide further impetus for the market. Collaborative efforts between the public and private sectors are also spurring technological advancements in ethanol production.

Challenges and Constraints in the India Ethanol & Ethanol Feedstock Market

Despite the optimistic outlook, several challenges hinder the ethanol market in India. Volatile feedstock prices, particularly sugarcane, can disrupt production economics. Limited infrastructure for ethanol transportation and storage adds to distribution costs. Additionally, inconsistent rainfall and climate variability affect feedstock availability, while competition from other industries, such as sugar and food grains, strains the supply of raw materials. Regulatory hurdles and delays in project approvals also slow down the pace of expansion, particularly for newer ethanol refineries.

Trends in Ethanol Production and Demand in India

India has seen a steady increase in ethanol production, with over 200 ethanol refineries across the country, largely concentrated in sugar-producing regions like Maharashtra and Uttar Pradesh. As of now, India's industrial ethanol production capacity is 13.80 billion liters (BL), comprising 8.75 BL from molasses and 5.05 BL from grain feedstocks. In its efforts to achieve 20% ethanol blending by 2025, India reached a blending rate of 11.6% in the first quarter of ESY 2023, reflecting a 13% increase compared to 2022. Key producers include Indian Oil Corporation, Hindustan Petroleum, and Bharat Petroleum. India’s ethanol blending rate was about 11.5-12% in 2023, with the government aiming to achieve 20% by 2030. Investment in second-generation ethanol plants is also growing, supporting future production targets.

Trends in Ethanol Feedstock Production and Demand in India

India's ethanol feedstock market is primarily driven by sugarcane and grain surplus, such as maize. Sugarcane accounts for nearly 60-70% of total ethanol production. With increasing ethanol blending targets, demand for sugarcane and alternative feedstocks is on the rise. The government's support for using surplus food grains and agricultural residues for ethanol production is crucial to managing the feedstock supply in the coming years.

Supply Chain Bottlenecks and Challenges in Ethanol & Ethanol Feedstock Distribution

India’s ethanol supply chain faces several logistical and infrastructural challenges. Limited storage facilities and inadequate transport infrastructure, especially in rural areas, complicate the distribution of both feedstock and ethanol. Inefficiencies in the rail and road networks further add to transportation delays, increasing overall costs. Seasonal fluctuations in sugarcane availability disrupt feedstock supply, and ethanol storage capacity at blending locations is often insufficient to meet surging demand. Furthermore, fragmented market dynamics, with small-scale producers scattered across regions, hinder the creation of a seamless, integrated supply chain. Addressing these issues is crucial for expanding the ethanol industry efficiently.

Government Policies Supporting Ethanol Production and Feedstock Utilization

The Indian government has implemented various policies to support ethanol production, such as the Ethanol Blending Program (EBP) and financial incentives for ethanol producers. These include pricing reforms and subsidies for ethanol derived from sugarcane and surplus grains. The National Biofuels Policy, introduced in 2018, emphasizes ethanol production from non-food biomass and promotes second-generation biofuels, enhancing the sector’s long-term sustainability and supply chain resilience.

The production of ethanol has significantly reduced the import of petrol and crude oil, helping India save foreign exchange. In 2022-23, the production of approximately 502 crore litres of ethanol resulted in foreign exchange savings of around ₹24,300 crores, while also enhancing the country’s energy security.

India’s Ethanol Trade Patterns (Export & Import Trends)

India's ethanol trade has traditionally focused on meeting domestic demand, with minimal exports. However, as production capacities expand, particularly with second-generation ethanol, there is potential for India to become a net exporter. The country imports small quantities of ethanol, primarily for industrial and pharmaceutical uses, from countries like Brazil and the U.S. However, the government's emphasis on domestic production and self-reliance under the Ethanol Blending Program is likely to limit imports in the fuel segment. With the anticipated rise in ethanol production, India could eventually emerge as a regional player in the export of biofuels to neighboring countries in South Asia.

Competitive Landscape of the Thailand Ethanol & Ethanol Feedstock Market

India’s ethanol market is highly competitive, with a mix of public sector undertakings, private companies, and agricultural cooperatives involved in production. Key companies like Indian Oil, Bharat Petroleum, and Hindustan Petroleum dominate the market, with smaller regional players contributing to localized production. New entrants are also making investments in second-generation ethanol plants to diversify the market further.

■ Indian Oil Corporation Limited
■ Hindustan Petroleum Corporation Limited
■ Bharat Petroleum Corporation Limited
■ Bajaj Hindusthan Sugar Limited
■ Praj Industries
■ Shree Renuka Sugars
■ Balrampur Chini Mills
■ Triveni Engineering & Industries
■ Dhampur Sugar Mills
■ EID Parry India
■ Godavari Biorefineries
■ HPCL Biofuels
■ Uttam Sugar Mills
■ Sakthi Sugars Limited
■ Simbhaoli Sugars Limited

Future Outlook

The future outlook for India’s ethanol market is highly optimistic, driven by the government's ambitious Ethanol Blending Program and increasing investments in production infrastructure. The focus on second-generation ethanol will reduce reliance on food-based feedstocks, promoting sustainability. With advancements in technology and logistics, India is poised to achieve its 20% blending target by 2030, enhancing energy security and reducing carbon emissions. Collaborations between public and private players, along with favorable regulatory frameworks, will continue to drive growth.