Importance of Ethanol in Economy and why India is Spending $7 Billion in Ethanol production?

Alan Joseph Alan Joseph
Jun 15, 2021 4 min read
Importance of Ethanol in Economy and why India is Spending $7 Billion in Ethanol production?

India has been planning to shift more into a much greener source of energy. The country has decided to increase the production of Ethanol to increase the production by 2025. Letโ€™s look at the importance of Ethanol in the economy and why India is planning to spend an amount of around USD 7 billion for the production of Ethanol.

Ethanol Production in India โ€“ Latest News
The reason why India is Spending $7 Billion in Ethanol production
How Ethanol is made in India?
How will Ethanol benefit Indian Economy?

Ethanol Production in India โ€“ Latest News

India has announced that the country is planning to spend an amount of USD 7 billion in order to boost Ethanol production as the country is planning to reduce the dependency on importing the foreign oil and to increase the roll out of much more greener sources of energy.

Indiaโ€™s oil secretary, Tarun Kapoor had conveyed in an interview that in order to meet the 20 % ethanol blended fuel standard by the year 2025, there will be a requirement of 10 billion litres of Ethanol.

The reason why India is Spending $7 Billion in Ethanol production

The Ethanol production target is estimated to be more than triple the amount of Ethanol that is going to be produced as compared to the Ethanol production as of November 2021. As of now, Ethanol produces 9% of the gasoline blend added Tarun Kapoor.

This move is expected to require around USD 500 billion for the investments in order to build new bio-refineries. The Prime Minister of India, Narendra Modi had also conveyed in the month of June 2021 that the target of the nation in order to make gasoline of 20 % ethanol by the span of 5 years by 2025 is expected to save a huge amount for the country.

The increase in the Ethanol production is expected to save around USD 4 billion annually. This move will also help in increasing the use of renewable sources of energy as India is the worldโ€™s third largest importer of oil and this will help in turning the excess rice and damaged foods of the country into Ethanol.

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How Ethanol is made in India?

As of now, the majority of the countryโ€™s Ethanol output is made up of the molasses that is obtained from sugarcane. However, the South Asian nations are trying to push for much more production from sources other than sugar which is estimated to make only 10 % of the contribution to the Ethanol production.

The Government has also conveyed that they would provide financial assistance for setting up the distillation units which will rely more on molasses and the grains for raw materials. According to Tarun Kapoor, the country is expected to reach a stage where the contribution for production of Ethanol will be 50 % grain based and 50 % sugar based.

Production volume of ethanol in India
Production volume of ethanol in India

How will Ethanol benefit Indian Economy?

The Ethanol industry will create a lot of jobs in the economy both direct and indirect jobs other than these the Ethanol will boost the rural economies; the co-product provides a valuable market for the corn grown.

Ethanol also helps in reducing the dependency on energy dependence and will reduce the importing of oil barrels of the country. The Ethanol biorefineries also make more than the fuel they also contribute towards food by providing nutritious animal feed like distillers grains. This is one of the most sought-after animals feeds as it is very nutritious.

Ethanol also contributes towards removing carbon from the environment which is expected to remove around pollution caused by 10 million cars on the road. It is also a cleaner and more greener option compared to the traditional fuel options.

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Ethanol has already been extensively adopted in the United States and has been contributing to the countryโ€™s economy. The approach taken by the Government of India towards increasing the production of Ethanol will be a significant step in the major sectors of the economy from Automobile to Agriculture.


Who is the largest producer of ethanol in India?

Uttar Pradesh has become on of the highest producer of ethanol in the country with the number of distilleries producing the solvent from heavy molasses, a by-product of cane juice.

Is ethanol production profitable in India?

The profit on ethanol production has come down to 5rs/litre.

What is Ethanol used for?

Ethanol is an industrial chemical; it is used as a solvent, in the synthesis of other organic chemicals, and as an additive to automotive gasoline (forming a mixture known as a gasohol).

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