Ethanol, an anhydrous ethyl alcohol having chemical formula of C2H5OH, can be produced from sugarcane, maize, wheat, etc which are having high starch content. In India, ethanol is mainly produced from sugarcane molasses by fermentation process. Ethanol can be mixed with gasoline to form different blends. As the ethanol molecule contains oxygen, it allows the engine to more completely combust the fuel, resulting in fewer emissions and thereby reducing the occurrence of environmental pollution. Since ethanol is produced from plants that harness the power of the sun, ethanol is also considered as renewable fuel. Ethanol Blended Petrol (EBP) programme was launched in January, 2003. The programme sought to promote the use of alternative and environment friendly fuels and to reduce import dependency for energy requirements. Implementation of EBP programme During 2001, pilot projects on Ethanol Blended Petrol started at 3 locations i.e. at Miraj, Manmad (Maharashtra) and Aonla/Bareilly in Uttar Pradesh. The Government of India decided to launch Ethanol Blended Petrol (EBP) Programme in January, 2003 for supply of 5% ethanol blended Petrol. Subsequent to this, Ethanol Blended Petrol programme was launched in January, 2003 in 9 States i.e. Maharashtra, Gujarat, Goa, Uttar Pradesh, Haryana, Punjab, Karnataka, Andhra Pradesh, Tamil Nadu and 4 Union Territories. The Ministry of Petroleum & Natural Gas (MoP&NG) vide its notification dated 20th September, 2006 directed the Oil Marketing Companies (OMCs) to sell 5% Ethanol Blended Petrol subject to commercial viability as per Bureau of Indian Standards specifications in notified 20 States and 4 UTs with effect from 1st November, 2006. The additional 10 States included Delhi, Himachal Pradesh, Madhya Pradesh, Chandigarh, Kerala, Rajasthan, West Bengal, Odisha, Bihar and Jharkhand. However, North - Eastern States, J&K, Andaman & Nicobar islands and Lakshadweep Islands have not been covered under the programme. This programme has been extended to whole of India except Union Territories of Andaman Nicobar and Lakshadweep islands with effect from 01st April, 2019 wherein OMCs sell petrol blended with ethanol up to 10%. The Government had 10% blending target for mixing ethanol with petrol by 2022 & 20% blending target by 2030. Government decided to advance the target of 20% ethanol blending in petrol from 2030 to ESY 2025-26. To achieve the target of 20% ethanol blending, approximately 1,016 crore litres of ethanol will be required. The total demand for ethanol, including other uses, is estimated to be around 1,350 crore litres. To meet this requirement, an ethanol production capacity of about 1,700 crore litres must be established, assuming the plants operate at 80% efficiency. The Average All-India Ethanol Blending Percentage as on 30-09-2025 is 19.17%. Procurement of ethanol The OMCs are to procure ethanol from domestic sources. Government has notified administered price of ethanol since 2014. The blending of ethanol with petrol increased from 38 crore litres in Ethanol Supply Year (ESY) 2013-14 to 500 crore litres in ESY 2022-23 with corresponding increase in blending percentage from 1.53% to 12.06%. In the ESY 2023-24, the blending percentage surpassed 13% with approximately 545.05 crore litres of ethanol blended as of August 31, 2024. This remarkable progress underscores a significant increase in the overall ethanol blending percentage, rising from 1.53% in 2014 to an impressive 15% in 2024. As large quantity of ethanol is available right from the beginning of sugar season due to conversion of sugarcane juice and B heavy molasses to ethanol, it has been decided to redefine Ethanol Supply Year as a period of ethanol supply from 1st November of a year to 31st October of the following year from 1st November, 2023 onwards. Over the past decade, this initiative has delivered significant benefits, including savings of Rs 1,06,072 crore in foreign exchange, a reduction of CO2 emissions by 544 lakh metric tons, and a substitution of 181 lakh metric tons of crude oil. Furthermore, the program has had a considerable economic impact, with OMCs disbursing Rs 1,45,930 crore to distillers and Rs 87,558 crore to farmers. The administered ex-mill price of ethanol for the EBP Programme derived from C Heavy Molasses (CHM) for the Ethanol Supply Year 2024-25 (1st November 2024 to 31st October 2025) has been fixed at Rs.57.97 per litre from Rs.56.58 per litre. Other recent enablers include enhancement of ethanol distillation capacity to 1713 crore litre per annum; Long Term Off-take Agreements (LTOAs) to set up Dedicated Ethanol Plants (DEPs) in ethanol deficit States; encourage conversion of single feed distilleries to multi feed; availability of E-100 and E-20 fuel; launch of flexi fuel vehicles etc. Government has reduced the GST rate on ethanol meant for EBP Programme from 18% to 5%. Use of Food Corporation of India rice and maize stocks for production of ethanol To increase production of fuel grade ethanol and to achieve blending targets, the Govt of India has allowed use of maize and rice with FCI for production of ethanol. Government has declared that rice available with FCI would continue to be made available to distilleries in coming years. The extra consumption of surplus food grains would ultimately benefit the farmers as they will get better price for their produce and assured buyers; and thus will also increase the income of crores of farmers across the country. Government has fixed price of ethanol from maize as Rs 71.86/litre & rice available with FCI as Rs 60.32/litre for ethanol supply year 2025-26. For FY 2020-21, Government has fixed the price of FCI rice to Rs 2000/quintal for production of ethanol. For FY 2024-25, Government has fixed the price of FCI rice to Rs 2250/quintal for production of ethanol. For the purpose of supply of surplus rice for the production of ethanol, distilleries are at liberty to choose the nearest FCI depot as per requirement/logistics. Source : Ministry of Petroleum and Natural Gas