Archive · 17 Jan 2026
India Hits 20% Ethanol Blending Milestone
India has achieved a big milestone by mixing 20% ethanol with petrol, which is great for the environment and energy security.
However, there is now too much ethanol being produced, and not enough is being used.
This is causing problems for sugar mills because they have invested a lot of money in making ethanol, but now they can't sell it all.
The government is using more grains like maize to make ethanol instead of sugar, which is making the situation worse.
Sugar mills are struggling because they are not making enough money to cover their costs.
The government needs to find a way to balance the ethanol market so that sugar mills can stay in business and farmers can get paid.
India achieved 20% ethanol blending with petrol in November 2025, ahead of the national target.
Ethanol distillation capacity exceeds current demand, with 1,990 crore litres available but only 1,050 crore litres needed for ESY 2025-26.
Sugar-based ethanol allocation dropped to 28% for ESY 2025-26, with grains dominating over 70% of tenders.
Sugar mills face financial strain due to underutilized distillery infrastructure and frozen procurement prices.
Sugar production increased by 25% by December 31, 2025, exacerbating surplus stocks and financial challenges for mills.
- Who
- Indian government, sugar mills, Oil Marketing Companies (OMCs), farmers
- What
- India achieved 20% ethanol blending with petrol, but faces ethanol surplus and sugar mill financial strain
- When
- November 2025 to present
- Where
- India
- Why
- To meet energy security and emission reduction goals, but surplus production capacity and reduced sugar-based allocations are causing financial strain on sugar mills
- Ethanol Blending Achievement
- 20% blending achieved in November 2025
- Ethanol Distillation Capacity
- 1,990 crore litres (as of November 2025)
- Current Ethanol Demand
- 1,050 crore litres for ESY 2025-26
- Sugar-Based Ethanol Allocation
- 289–307 crore litres (28%) for ESY 2025-26
- Grain-Based Ethanol Allocation
- Over 70% of tenders
- Investment in Distilleries
- Over ₹40,000 crore
- Procurement Price for Sugar-Based Ethanol
- ₹65.61/litre (frozen since late 2023)
- Sugar Production by December 31, 2025
- 118.97 lakh tonnes (up 25%)