«India Lifts Restrictions on Ethanol Production: New Prospects for Biofuel Program»

Key Policy Provisions

1. 1. Removal of Restrictions: In the 2025–2026 period, there will be no cap on the volume of ethanol that sugar mills or distilleries can produce from the permitted feedstocks.
2. 2. Feedstock Flexibility: Ethanol can be freely produced from sugarcane juice, sugar syrup, B-heavy molasses, and C-heavy molasses.
3. 3. Periodic Review: The government will periodically review the use of sugar for ethanol production in cooperation with the Ministry of Petroleum to ensure sufficient domestic sugar supplies.

Context of the Ethanol Blending with Petrol (EBP) Program

1. 1. Accelerated Targets: India achieved the target of 20% ethanol blending with petrol (E20) by 2025, five years ahead of the schedule outlined in the 2018 National Policy on Biofuels (2030).
2. 2. Economic and Environmental Impact: The policy aims to reduce oil imports, support farmer incomes, cut emissions, and stimulate job creation in rural areas.
3. 3. Blending Progress: As of July 31, 2025, the level of ethanol blending with petrol in India reached 19.05%, with the target for 2025–2026 set at 20% (E20).

Implementation and Broader Impact

1. 1. Oil Marketing Companies (OMCs): Indian OMCs purchase ethanol at pre-set prices and blend it with petrol, which is then sold at fuel stations.
2. 2. Market Response: The removal of production restrictions led to a rise in stock prices within the sugar and ethanol sectors, reflecting expectations of increased production volumes and sectoral growth.
3. 3. Ongoing Government Oversight: Despite deregulation, authorities will monitor the balance between ethanol and sugar production to avoid shortages or sharp price fluctuations in the domestic sugar market.

In conclusion, India's policy for 2025–2026 completely lifts restrictions on ethanol production by sugar mills and distilleries, fostering the further development of the ethanol blending program, enhancing energy security, supporting farmers, and helping to achieve ambitious climate goals.