PSU OMCs spend over ₹1.72 lakh crore on ethanol procurement across three ESYs: Govt
Public sector Oil Marketing Companies (OMCs) have collectively spent over Rs 1.72 lakh crore on ethanol procurement across the three most recent Ethanol Supply Years (ESYs)
Year-wise spend: Rs 48,757 crore in ESY 2023-24, Rs 73,996 crore in ESY 2024-25, and Rs 49,577 crore in ESY 2025-26 (up to June)
As of mid-July, 501 ethanol suppliers were registered with the OMCs under the Ethanol Blended Petrol (EBP) Programme, drawing on both sugarcane-based and grain-based feedstocks
The figures were shared in a written reply in the Rajya Sabha in response to a question on the ethanol procurement network and supplier base
Uttar Pradesh led ethanol-blended petrol sales among states in ESY 2024-25, followed by Maharashtra, Tamil Nadu, Karnataka and Gujarat
Ethanol Blended Petrol (EBP) Programme
The EBP Programme, administered by the Ministry of Petroleum and Natural Gas, mandates and incentivises the blending of ethanol with petrol to cut crude oil imports, save foreign exchange and reduce vehicular emissions. Launched in 2003 with a modest 5% blending target in select states, it was extended nationwide (excluding Andaman & Nicobar and Lakshadweep) from April 2019, with OMCs procuring ethanol directly from registered domestic suppliers.
Key Details
- Launched 2003; initial notification targeted 5% ethanol blending in nine states and four Union Territories from 1 January 2003
- Nationwide 10% blending mandated from 1 April 2019 (February 2019 notification)
- National Policy on Biofuels, 2018 (amended 2022) advanced the 20% blending (E20) target from 2030 to Ethanol Supply Year 2025-26; India reached the 20% blending milestone by ESY 2024-25/early 2025, roughly five years ahead of the original schedule
- Blending share rose from about 1.5% in 2014 to 20% by 2025, with intermediate milestones of 12.06% (ESY 2022-23) and 14.60% (ESY 2023-24)
The Rs 1.72 lakh crore procurement spend across three ESYs is the direct fiscal footprint of scaling the EBP Programme from roughly 10% toward the 20% (E20) blending target, reflecting the rapid ramp-up in both ethanol volumes procured and supplier participation.
Ethanol Supply Year (ESY) and Feedstock Sources
An Ethanol Supply Year runs from December to November (rather than the calendar year or the financial year), a cycle chosen to align procurement with the sugarcane crushing season. OMCs source ethanol from two broad feedstock categories: sugarcane-based (C-heavy molasses, B-heavy molasses, sugarcane juice and sugar syrup) and grain-based (damaged foodgrains, maize, and surplus rice sourced from the Food Corporation of India).
Key Details
- ESY runs December to November, distinct from the April-March fiscal year used for most other government accounting
- Dual feedstock policy (sugar-based and grain-based) was adopted to diversify ethanol supply beyond sugarcane alone and reduce dependence on any single crop cycle
- Government periodically revises the administered price paid to distilleries for ethanol from each feedstock category (e.g., C-heavy molasses, B-heavy molasses, sugarcane juice, and grain-based ethanol each have separate price slabs)
- Surplus rice diverted from the Food Corporation of India for ethanol production has been a notable, debated diversification within the grain-based route
The growth in registered suppliers (501 as of the reply) and the rising procurement spend reflect the expanding grain-based supply chain alongside the traditional sugar-based one, needed to sustain the 20% blending mandate without over-relying on sugarcane.
Fuel Blending, Energy Security and Emission Reduction
Ethanol blending is pursued as an energy-security and climate-linked measure: it substitutes a domestically produced, renewable input for imported crude-oil-derived petrol, and lower-carbon combustion from ethanol content reduces certain tailpipe emissions compared to pure petrol. Vehicles compatible with higher ethanol blends (E20) require calibration changes, which auto manufacturers have progressively rolled out since the EBP Programme's nationwide expansion.
Key Details
- Ethanol blending is credited with reducing crude oil import dependence and saving foreign exchange, alongside cutting cumulative CO2 emissions
- E20-compliant vehicles need engine and fuel-system modifications; the government has worked with the automobile industry on phased compatibility
- The programme is linked to the broader National Policy on Biofuels, 2018 framework, which also covers biodiesel and advanced/2G biofuels
- Ethanol blending beyond 20% (E27, flex-fuel vehicles) is under policy discussion as a further stage of the programme
The scale of procurement spend disclosed in Parliament is a proxy indicator of how far the EBP Programme has progressed toward, and beyond, its energy-security and emission-reduction goals under the National Policy on Biofuels.
- Total OMC ethanol procurement spend across three ESYs: over Rs 1.72 lakh crore
- Year-wise: Rs 48,757 crore (ESY 2023-24), Rs 73,996 crore (ESY 2024-25), Rs 49,577 crore (ESY 2025-26, up to June)
- Registered ethanol suppliers with OMCs: 501 (as of mid-July)
- EBP Programme launched: 2003; nationwide 10% blending: April 2019; 20% (E20) blending achieved: ESY 2024-25, about five years ahead of the original 2030 target under the National Policy on Biofuels, 2018 (amended 2022)
- Ethanol Supply Year (ESY): runs December to November
- Top states by ethanol-blended petrol sales in ESY 2024-25: Uttar Pradesh (124.98 crore litres), Maharashtra (110.66 crore litres), Tamil Nadu (92.18 crore litres), Karnataka (79.24 crore litres), Gujarat (56.29 crore litres)