Govt eyes over Rs 40-k crore investment in ethanol production

Globally, maize is the preferred grain to produce ethanol as it is economically viable.

By Prabhudatta Mishra 

India has set a target to raise its ethanol output by 80% with fresh investments to the tune of Rs 41,000 crore, as it seeks to achieve 20% ethanol blending target for gasoline sold in the country by 2025. The plan will help curb India’s ever-rising oil import bill, save Rs 30,000 crore worth foreign exchange annually and enable sugar mills to pay cane farmers on time, a senior official said on Tuesday.

Already, as many as 422 investment proposals have been approved and more are in the pipeline, food secretary Sudhanshu Pandey said. MRN Group of Karnataka, Balrampur Chini Mills, Chandigarh Distillers, Globus Spirits, Baramati Agro and Triveni Engineering are among the firms that have got approvals to set up their ethanol plants in next one year, a source said. “There is limited opportunity in sugarcane-based ethanol plants whereas huge potential exists for grain-based plants,” Pandey said.

Prime minister Narendra Modi had advanced India’s 20% ethanol-blending target by five years to 2025. At present, 819 crore litres of ethanol is produced in the country per annum.

The government has allowed ethanol industry to source rice from the official stock held by Food Corporation of India (FCI) at Rs 20/kg, Pandey said, adding the move is aimed at helping the units do not face raw material shortage in short-term. Globally, maize is the preferred grain to produce ethanol as it is economically viable.

In India, 60% of maize produced is used as cattle and poultry feed while 20% each goes for human consumption and industrial use for starch manufacturing. Maize farmers perennially sell their crops at below minimum support price (MSP) due to lower demand. In 2020-21, maize production is estimated to have jumped 5% to 30.24 million tonne (MT) from the year-ago period.

Modi, while releasing a report of the expert committee on “Road Map for ethanol blending in India 2020-2025″ on June 5, had said that till 2014, on an average, only 1.5% of ethanol could be blended which now has reached about 8.5%. Out of total installed capacity, manufacturers including oil marketing companies (OMCs) are likely to produce 707 crore litre — 440 crore litre from sugarcane-based and 267 crore litre from grain based plants – during 2020-21 (December-November).

Use of E20 fuel (20% ethanol+80% petrol) is expected to reduce carbon monoxide emission by 30-50%. He also said that in the next sugar season 2021-22 (October-September), about 3.5 MT of sugar is estimated to be diverted and by 2025 about 6 MT is targeted to be diverted to ethanol, which would solve the problem of excess sugarcane/sugar and would also help sugar mills in clearing cane price dues of farmers. In the past three sugar seasons, about Rs 22,000 crore revenue was generated by sugar mills/distilleries from sale of ethanol to OMCs.

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