January 29, 2025: In a strategic move to strengthen the country’s fuel-blending programme, the Cabinet Committee on Economic Affairs, led by Prime Minister Narendra Modi, has approved a price hike for ethanol, a key by-product of sugar, on Wednesday. This decision is expected to bolster the nation’s ethanol production, which is vital for blending with petrol, and provide higher returns to farmers, ensuring their increased cultivation costs are covered.

The price of ethanol derived from C heavy molasses for the ethanol supply year 2024-25 (from November 1, 2024, to October 31, 2025) has been set at ₹57.97 per litre, marking a 2.5% increase from the earlier price of ₹56.58 per litre.

This price revision comes in alignment with the government's ongoing fuel-blending programme, designed to reduce India’s dependence on overseas petroleum imports. With India being the world’s third-largest oil importer, this initiative aims to address the growing need for energy security.

According to an official statement, ethanol blending has already led to significant savings in foreign exchange, amounting to USD 14.4 billion over the past decade (2014-15 to 2023-24). This economic benefit further underscores the importance of the programme, which aims to blend 20% ethanol into petrol by 2025-26, advancing the original target of 2029-30, as announced by PM Modi in June 2021.

In addition to incentivizing sugar mills to increase ethanol production, the Union government had introduced a modified scheme in January 2021. This scheme includes providing cheaper loans to sugar mills for setting up ethanol-blending plants, ensuring guaranteed buyers for the next decade.

Ethanol is also produced from grains like rice and maize, and a significant portion of the blending programme is now utilizing these sources. The government has set a target to use nearly 6 million tonnes of sugar by-products, which would constitute about 18% of the total ethanol required by 2025.

To further enhance the blending capacity, the government is also ramping up ethanol distillation capabilities to 17.13 billion litres annually. Long-term agreements are being put in place for establishing dedicated ethanol plants in states where ethanol production is still deficient.

Union Minister of Information and Broadcasting, Ashwini Vaishnaw, highlighted these developments during a press briefing, underscoring the government's commitment to boosting ethanol production and achieving self-reliance in the energy sector.