Mains Marathon

Approach:

• Briefly introduce India’s ethanol blending policy and its transformative aim.
• In body, analyse the impact on traditional supply chains and agro-industrial linkages in the sugar sector.
• Conclude suitably.

Introduction:

India’s Ethanol Blending Programme (EBP) aims to reduce fossil fuel dependency and boost energy security. In FY25, India achieved 20% blending ahead of its 2025-26 target, reflecting rapid ethanol-centric transformation of the sugar sector into biofuel hubs.

Body:

• Rapid Diversion from Sugar to Ethanol: In 2024-25, 35 lakh tonnes of sugar are estimated to be diverted for ethanol, disrupting traditional sugar supply chains focused on food consumption.
• Transformation of Mills into Biofuel Hubs: With ₹40,000 crore invested and 1,380 crore litres capacity installed by 2023, sugar mills now act as integrated energy units, producing ethanol, power, and industrial by-products.
• Reconfiguration of Agro-Industrial Linkages: Traditional cane crushing-sugar production-retail sale linkages have evolved into feedstock-ethanol-fuel supply chains, involving distilleries, oil companies, and new logistics networks.
• Expansion of Multi-Feedstock Distilleries: Especially in Uttar Pradesh, distilleries process sugarcane, rice, and maize, ensuring year-round operations and diversification beyond sugar alone.
• Grain-Based Ethanol and Allied Sector Impacts: Increased use of maize for ethanol has raised imports (₹103 million in Apr-Jun 2025), pressuring poultry, livestock, and starch sectors, which rely heavily on domestic maize.
• Water and Sustainability Trade-offs: Producing 50% of 1,000 crore litres ethanol from sugarcane demands 400 billion litres of water, potentially diverting irrigation from food crops, risking agro-ecological sustainability.
• Regional Disparities in Adoption: States like U.P. lead the ethanol drive, while Tamil Nadu and Maharashtra prioritize Extra Neutral Alcohol (ENA) and liquor production, due to political economy and market considerations.
• Policy-Induced Market Realignment: Long-term Operation and Maintenance Contracts (OMC) and GST concessions on ethanol have formalized new input–output markets, realigning incentives across fuel, food, and agro-processing sectors.
• Food vs Fuel Debate Intensifies: Rising sugar and maize prices reflect tensions between consumption needs and energy goals, demanding a careful resource allocation strategy.

Conclusion:

India’s ethanol policy is restructuring the sugar sector into a dynamic bio-industrial ecosystem, supporting energy security, rural development, and clean fuel goals. Yet, resolving the emerging food-fuel-water trade-offs and promoting 2G and 3G ethanol will be essential for long-term sustainability and economic balance.