What Happened
- The Indian Sugar and Bio-Energy Manufacturers Association (ISMA) urged the Prime Minister's Office to fast-track a roadmap to raise the Ethanol Blended Petrol (EBP) Programme target from 20% to 22%, 25%, or 27%
- The request was made in a meeting with Union Food Minister Pralhad Joshi, citing three reasons: energy security strengthening amid the West Asia crisis, farmer income support through higher sugarcane-derived ethanol procurement, and reducing foreign exchange outflow from crude imports
- India had already achieved 19.8% blending by May 2025 — effectively meeting the E20 target ahead of the original 2025 deadline
- The West Asia crisis and LPG/fuel supply disruption have reinforced the urgency of domestic ethanol expansion as a substitute for petroleum
- Over the 11-year history of the EBP Programme (Ethanol Supply Year 2014-15 to July 2025), ethanol substituted 245 lakh metric tonnes of crude oil, saved over ₹1.44 lakh crore in foreign exchange, and reduced CO2 emissions by approximately 736 lakh metric tonnes
Static Topic Bridges
Ethanol Blended Petrol (EBP) Programme: Structure and Progress
The EBP Programme, managed by the Ministry of Petroleum and Natural Gas in coordination with the Ministry of Food, mandates oil marketing companies (OMCs) to blend domestically produced ethanol with petrol. Ethanol is produced from: molasses (by-product of sugar refining), sugarcane juice (directly from cane), and grain (maize, rice, damaged grain). Procurement prices for ethanol from different feedstocks are fixed by the government annually. The programme has scaled from 1.53% blending in ESY 2013-14 to ~19.8% by May 2025. India introduced the National Biofuel Policy 2018 (revised 2022) which set E20 as the 2025 target and charts a pathway for E20+ fuels.
- National Biofuel Policy 2018 (revised 2022): categorises biofuels into three generations; mandates blending targets
- Ethanol supply capacity (sugar sector): 853 crore litres/year, including 174 crore litres from dual-feed plants
- Government-fixed procurement price for ethanol from sugarcane juice (ESY 2025-26): ₹65.61/litre
- Foreign exchange saving at E20: approximately ₹43,000 crore annually
- Farmer payments through EBP: approximately ₹40,000 crore per year at E20 level
Connection to this news: Achieving E20 in 2025 represents a major milestone; the industry's push to E22–E27 during the 2026 energy crisis reflects the programme's proven track record and the elevated urgency of reducing fossil fuel imports.
Sugarcane Economics and Farmer Income
India is the world's second-largest sugar producer (after Brazil) with approximately 32.41 million tonnes of sugar production projected for SY2026. Sugarcane is cultivated across approximately 5.5 million hectares, primarily in Uttar Pradesh (largest producer), Maharashtra, Karnataka, Tamil Nadu, and Gujarat. The Fair and Remunerative Price (FRP) of sugarcane — set annually by the Cabinet Committee on Economic Affairs on recommendations of the Commission for Agricultural Costs and Prices (CACP) — is the minimum guaranteed price mills must pay farmers. States can also declare a State Advised Price (SAP) above the FRP.
- FRP for sugarcane SY2025-26: ₹340 per quintal
- India's total sugarcane area: approximately 5.5 million hectares
- Sugar industry employs approximately 5 crore farmers and 5 lakh mill workers directly
- Ethanol diversion from sugar: in SY2026, approximately 3.1 MT of sugar equivalent diverted to ethanol
Connection to this news: Higher ethanol blending targets directly translate to higher demand for sugarcane, supporting FRP realisations and reducing the perennial issue of mill payment arrears to farmers — making E20+ a convergence of energy policy and agricultural income support.
Biofuel Policy and Energy Security Linkage
Under the National Biofuel Policy 2022 revision, India expanded permissible feedstocks for ethanol production and enabled import of sugarcane-derived ethanol from Brazil under specific conditions. The policy prioritises food security by mandating that ethanol production from grain crops like rice and maize remains within surplus production — surplus identification is done annually by the Ministry of Food. The West Asia crisis has added a geopolitical urgency: domestic biofuel production is immune to maritime chokepoint disruptions, unlike crude oil imports — making it a form of strategic energy self-sufficiency.
- National Biofuel Policy 2018: introduced Generation 1 (food crops), Generation 2 (agricultural residues), and Generation 3 (algae) biofuels
- 2022 amendment: permitted ethanol production from maize, damaged grain, and surplus rice; allowed export of surplus ethanol
- Biofuel imports for blending require approval; Brazil is the world's largest ethanol exporter
- India-Brazil biofuel cooperation: a key component of bilateral relations; MoU on biofuels signed during PM Modi's Brazil visit (2023)
Connection to this news: The ISMA request for E22–E27 targets, timed during the Hormuz crisis, frames biofuel expansion as a national security imperative — moving the debate from agricultural policy to energy sovereignty, which significantly increases political traction.
Key Facts & Data
- EBP achievement: 19.8% blending by May 2025
- Ethanol substituting crude oil (11 years): 245 lakh metric tonnes
- Foreign exchange saved (11 years): ₹1.44 lakh crore
- CO2 emission reduction (11 years): ~736 lakh metric tonnes
- Annual farmer payments at E20: ~₹40,000 crore
- Annual forex saving at E20: ~₹43,000 crore
- Sugar industry ethanol capacity: 853 crore litres/year
- Sugarcane FRP (SY2025-26): ₹340/quintal
- Proposed next targets: E22, E25, E27