India’s ethanol blending program stands at a critical crossroads. While the government celebrates achieving 20% ethanol blending ahead of schedule and eyes an ambitious 30% target by 2030, farmers and industry stakeholders are raising uncomfortable questions about pricing fairness and sustainability.
Price Hike
India’s ethanol push promises cleaner fuel and reduced oil imports, but farmers’ benefits remain uncertain. While demand for sugarcane and grain-based ethanol is rising, recent price cuts and delayed revisions have squeezed farmer margins. Despite policy ambition, the key question persists: Is the ethanol economy truly delivering fair, stable income to growers?
For the Ethanol Supply Year 2024-25, the government increased ethanol prices from C Heavy Molasses by just 3%, from Rs 56.58 to Rs 57.97 per litre. This modest revision comes after prices remained frozen since 2022-23, despite rising input costs and inflation. Ethanol from cane juice is priced at Rs 65.61 per litre, while B-Heavy molasses stands at Rs 60.73 per litre.
The government’s aggressive timeline shift speaks volumes about its priorities. The original 20% blending target was moved forward from 2030 to 2025-26, and India successfully achieved this milestone by March 2025. Now, officials are confirming inter-ministerial discussions to raise the national blending target to 30% by 2030.
Livestock Strain
Behind these impressive statistics lies a troubling reality. Maize demand for ethanol has jumped from 0.8 to 12.7 million tonnes in just two years, intensifying a “fuel versus feed” conflict. This surge pushed maize prices from Rs 15,000 to Rs 25,000 per tonne, squeezing livestock and poultry farmers already struggling with feed costs. With domestic supply unable to keep up, India has now turned into a net importer of maize, raising deeper food-security concerns.
The ripple effects extend beyond maize. The All-India Poultry Breeders Association reported a domestic maize shortage of 5 million tonnes in 2023 due to ethanol blending. Additionally, the byproduct DDGS from maize ethanol has undercut soybean prices from Rs 55 per kilo to Rs 35 per kilo, causing them to fall below Minimum Support Price levels, directly harming soybean farmers.
Are Farmers Really Benefiting?
The government’s narrative emphasizes farmer gains. Officials claim farmers earned Rs 1,25,000 crore due to increased demand for feedstocks between 2014-15 and July 2025. Yet this aggregate figure masks regional disparities and the challenges faced by different farming communities.
The Fair and Remunerative Price (FRP) for sugarcane has been raised to Rs 355 per quintal for 2025-26, but farmers argue the 4% hike barely matches rising input costs. With ethanol prices unchanged for over two years despite higher operational expenses, many question whether the revised FRP truly supports cultivators.
Environmental Promises and Pollution Reality
While the government highlights environmental benefits—approximately 700 lakh tonnes of CO₂ emissions have been avoided till 2025—critics point to contradictions. All ethanol production facilities and distilleries are categorized as red by the Central Pollution Control Board, with pollution scores ranging from 75 to 80. Environmentalists argue that harmful chemicals released during biofuel production may offset the claimed carbon savings.
The Bottom Line
The ethanol policy aims to cut fuel imports, lower emissions, and boost demand for farm produce. It has strengthened sugar mills financially, helping them clear dues. While these intentions are valid, the broader impact on farmer incomes remains uneven and needs closer evaluation.
However, fair pricing for farmers remains uncertain. While ethanol producers benefit from assured demand and fixed pricing, growers rely on FRP rates that overlook market fluctuations and the added value created through ethanol conversion, leaving them with limited gains despite rising industry profitability.
For India’s 2030 ethanol goals to genuinely support farmers, pricing and payment reforms are essential. Ethanol rates must directly reflect what farmers earn, with quicker payouts and better infrastructure in underserved regions. Clear transparency on profit sharing across mills, OMCs, and processors is crucial to ensure fair farmer income.
Conclusion
India’s ethanol roadmap is ambitious, but its success hinges on ensuring farmers truly benefit. While blending targets support energy security and mill profitability, uneven pricing, feedstock shortages, and falling crop realizations weaken farmer confidence. Without fair price linkage, faster payments, and transparent value sharing, the ethanol transition risks widening disparities instead of strengthening rural incomes.
Written by Abhishek Singh
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