India’s ethanol production capacity, often labeled as “overcapacity,” is actually a strategic national asset built through clear policy guidance and long-term planning, the Grain Ethanol Manufacturers’ Association (GEMA) stated today. The current capacity is not the result of speculative investments but a direct outcome of strong government policies and a forward-looking national programme.
The Ethanol Blending Programme (EBP) was never meant to stop at 20% blending; that figure was intended only as a checkpoint to assess feedstock availability, investor readiness, rural impact, and system preparedness. Guided by consistent policy signals, the industry invested ahead of immediate demand to create long-term capacity. India’s strategy has consistently aimed for higher ethanol blends, the adoption of Flex-Fuel Vehicles (FFVs), and global standards such as Brazil’s model, where ethanol accounts for nearly 55% of petrol consumption. Investments were therefore made in alignment with this long-term vision rather than short-term procurement cycles.
The ethanol programme has already generated substantial national benefits. In FY 2024–25 alone, it helped save ₹40,000 crore in foreign exchange and injected nearly ₹50,000 crore into the rural economy. Rural areas have seen tangible growth through increased farmer incomes, expanded employment, and stronger agricultural value chains. India remains a surplus grain-producing nation, capable of supporting both food security and clean fuel production.
Commenting on the situation, Dr. C.K. Jain, President of GEMA, said, “Ethanol capacity was built in response to a clear national mandate. The priority now is to expand demand, not reduce capacity, so that the programme’s full economic, rural, and environmental benefits can be realized.”
GEMA emphasized that increasing demand through higher blending, accelerating the rollout of FFVs, rapidly developing ethanol dispensing infrastructure, and rationalizing GST/VAT on ethanol could help India save up to ₹2 lakh crore annually in foreign exchange, against an oil import bill of nearly ₹22 lakh crore.
“The capacity exists. The investment is made. Now the policy must unlock consumption,” GEMA concluded.
