India ethanol demand projected to reach 17.9 billion litres by FY31

India’s ethanol industry is entering a significant growth phase, with demand projected to reach 17.9 billion litres by FY31 if ethanol blending in petrol reaches 25 per cent. This increase would utilize nearly 98 per cent of the country’s current 18.25 billion litres of installed distillation capacity.

Should blending targets move toward E30, demand could rise to 21.5 billion litres, exceeding current capacity by approximately 18 per cent and necessitating new investment in distillation plants. The industry is seeing a shift in raw materials, with grain-based ethanol—specifically maize—accounting for a growing share of allocations compared to sugar-based routes.

While the ethanol programme has successfully increased blending from below 1.5 per cent in 2013-14 to 20 per cent for the 2025-26 period, producers face challenges regarding feedstock costs and EBITDA margins.