Ethanol Glut Clouds India’s Rs 50,000 Crore Green Fuel Industry

India’s ethanol industry, once hailed as a cornerstone of its green energy transition, is now grappling with oversupply. The government’s push for 20 percent ethanol blending in petrol by 2025 led to massive investments in distilleries, but demand has not kept pace with production.  

Industry experts warn that excess capacity could destabilize the sector, affecting sugar mills and grain-based ethanol producers. Farmers, who were promised higher incomes through ethanol-linked demand, now face uncertainty as surplus production threatens profitability.  

The glut also raises questions about policy alignment. While ethanol blending reduces carbon emissions and dependence on fossil fuels, the mismatch between supply and demand highlights the need for better planning, diversification into bio-CNG, and export opportunities. Without corrective measures, India’s ethanol dream risks turning into an economic burden.  

Key Highlights  

• India invested Rs 50,000 crore in ethanol capacity  
• Excess production has led to a market glut  
• Demand for ethanol blending lags behind supply  
• Sugar mills and grain-based producers face profitability concerns  
• Experts call for diversification and export strategies  

Sources: Business Standard, Economic Times, Mint