Industry Odisha Bureau, Sep 08: India achieved its E20 ethanol target during ESY 2025-26. This came five years ahead of the original schedule. An ICRIER research paper now proposes added flexibility. E20 should remain the long-term policy objective, it argues. Temporary E15 blending could apply during specific shortages.
The paper is titled “Food vs Fuel: Recalibrating India’s Ethanol Blending Strategy.” Agricultural economist Ashok Gulati co-authored the research. It recommends E15 when domestic ethanol availability turns insufficient. Disproportionately high food or feed costs could also trigger flexibility. The choice should reflect relative economic costs, the paper says.
India’s ethanol programme has scaled rapidly in recent years. OMCs procured 6.79 billion litres during ESY 2023-24. Procurement rose to 10.33 billion litres in 2024-25. Through June 2026, OMCs had procured 7.05 billion litres. Corresponding expenditure reached roughly ₹48,757 crore, ₹73,996 crore and ₹49,577 crore.
Ethanol supplied to OMCs has grown even more dramatically. Volumes rose from 1.73 billion litres in 2019-20. A projected 12 billion litres is expected by 2025-26. This reflects an approximate 38% CAGR over six years.
Feedstock production has not kept pace with this expansion. Maize production grew at an 11.4% CAGR over that period. Sugarcane output expanded at 5.1% annually during the same years. Rice production grew more slowly, at 4.4% CAGR. This gap underlies a widening food-versus-fuel tension, the paper argues.
Sugar markets already show signs of this pressure. The paper cites a 44% rise in modal retail sugar prices. Prices climbed from ₹45 per kilogram in July. By August 29, prices had reached ₹65 per kilogram. Low opening stocks and weaker output contributed to the increase, it notes.
The paper recommends sugar-based ethanol remain important when supplies are abundant. Diversion toward ethanol should moderate when stocks tighten, it suggests. Maize could absorb a larger ethanol share going forward. This depends on improving productivity and expanding market supply.
FCI rice should remain a largely residual feedstock, the paper argues. Its use should focus on genuine surplus stocks only. The paper also recommends pricing rice near acquisition costs.
Greater openness toward imports could serve as a buffer. This includes ethanol imports, feedstock imports and sugar imports. Such flexibility could ease pressure during agricultural supply shocks, it suggests.
The programme aims to cut dependence on imported fossil fuels. It also seeks to boost domestically produced renewable fuel use. ICRIER’s proposed framework attempts to balance these energy goals. Agricultural availability and food-market stability remain equally important, it argues.
The recommendations remain proposals rather than confirmed government policy. India’s early E20 achievement is not framed as at risk. Instead, the paper suggests adaptive tools for future supply conditions. Maintaining E20 ambitions while managing feedstock swings remains the central challenge.
