Ethanol blending: India's Rs 50,000 cr bet to cut dependence on foreign oil

India is set to spend almost $7 billion to boost ethanol production as it prepares to roll out a greener mix of gasoline that may cut its dependence on foreign oil.

About 10 billion liters of ethanol will be required each year to meet the 20% ethanol-blended fuel standard by 2025, India’s Oil Secretary Tarun Kapoor said in an interview with Bloomberg Television on Friday.

That’s triple the amount of ethanol that’ll go into the mix as compared to the year ending November 2021, when ethanol constitutes 9% of blended gasoline, he said. The move will require about Rs 50,000 crore of investment to build new bio-refineries.

Earlier this month, Prime Minister Narendra Modi advanced the nation’s target of making gasoline with 20% ethanol by five years to 2025 in a move that’s expected to save $4 billion annually. It’ll also expand the use of renewable energy in the world’s third-biggest oil importer and help turn the nation’s surplus rice and damaged food grains into ethanol.

While most of India’s ethanol output is currently made from sugarcane molasses, the South Asian nation is pushing for greater production from non-sugar sources that make up less than 10% of current supplies, Kapoor said. Its government is offering financial assistance for setting up distillation units that rely on molasses and grains as raw material.

“Moving along, we will have to reach a stage where 50% is sugar-based and 50% grained based,” he said.