Sugar Sector - Ethanol blending reaching 10% level
OMCs had floated tenders to procure 458 crore litre of ethanol for more than 10% ethanol blending with petrol for 2021-22 ethanol procurement year (December-November). Moreover, they have finalised supplies of 416 crore litre and issued letter of intent for 401 litre.
Sugar production in India has been continuously increasing in the last five years. The government is encouraging sugarcane diversion towards ethanol to reduce sugar production as well as increase ethanol blending levels. Ethanol blending in India has increased from 1.53% (38 crore litre) in 2014 to 8.1% (303 crore litre) in 2021, which would further increase to 10% in 2022 (430 crore litre) and 20% by 2025 (1000 crore litre).
With the huge distillery capacity addition along with increasing sugarcane availability, India would be able to divert 3.5 million tonnes (MT) equivalent sugarcane towards ethanol in 2022 & 6 MT equivalent sugarcane by 2025. This would significantly reduce the dependency on sugar exports in the next two to three years. Further, area under sugarcane cultivation is also increasing given sugarcane remains the most remunerative crop. This would further help in ethanol production through sugarcane beyond targeted 700 crore litre and ethanol blending above 20% with the introduction of flex fuel vehicles. This would curtail the government’s crude import bill by Rs 50,000 crore by 2025. Moreover, the increasing revenue from ethanol has eliminated cylicity in the sugar sector resulting in structural growth in profitability for sugar companies and swift payment to the farmers.
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