India’s Sugar Industry Set for Windfall Amid Ethanol Push

by Ravi Gupta (Times of India) India’s determination to increase use of biofuels drove a massive increase in ethanol production in the last 5 years and continuing. The demand for ethanol is keeping the pace and is only set to grow as the nation pushes toward its aim of attaining ‘energy independence’. India has set a bold target to completely eliminate its reliance on energy imports by the time it celebrates 100 years of independence. Biofuels, and especially ethanol, is the key part of Government’s energy independence strategy.

Biofuel is fuel produced from natural biomass such as sugarcane juice, corn, and even grains and nuts etc. It helps in burning the carbon fuel efficiently resulting in far lower carbon emissions. These fuels are farmer friendly and is also a catalyst for rural growth.

The use of blended fuels got off to a slow start in India. However, Government measures to boost the ethanol blending in petrol, has driven a rapid acceleration in the use of blended fuels. So rapid has this transition been that the government has actually brought forward blending targets set out by the National Policy on biofuels.

First laid out in 2018, the policy had initially targeted the year 2030 to achieve 20% ethanol blending petrol, which was brought forward by five years to 2025-26. It is a matter of pride for India that the country has one of the fastest growing ethanol program in the world. The current ethanol blending has exceeded 10% in India.

India imported 185 million tons of petroleum at a cost of $55 billion in 2020-21, according to a report from the NITI Aayog Committee. The India transportation sector is mostly dependent on imported fuels, which is not good for a growing economy like India as it is results in imported inflation, volatility in fuel prices, energy dependence and a slower economic growth. Ethanol can help in reducing the imports, foreign exchange outgo and at the same time result in rural growth because it is a agriculture based fuel.

The rush to meet this anticipated ethanol demand, therefore, could provide a windfall for the sugar industry as sugar ethanol is the most viable and cheaper source of fuel ethanol.

Ethanol can be produced from a number of sources, including corn, barley, rice and sorghum.

This has made India as the second-largest exporter of sugar in the world after Brazil but exports are not a long term solution as global supply gluts, higher prices for Indian sugar compared to other sugar producers due to higher sugarcane price as well as global surplus production means stocks in India may lie idle, with payments to sugarcane growers held up.

Government of India is rolling out incentives to boost ethanol production, surplus sugar production can be redirected to the manufacture of ethanol, allowing it to be used up and, more crucially, and monetised. Government is thus rightly pushing the ethanol production and increasing the consumption by increasing the ethanol blending percentage year on year. The modern technology based automotive which can use 20 percent ethanol blending fuel are on the anvil followed by flexi fuel cars which can run on 100% ethanol.

Once technology allowing ethanol to be blended with diesel, which is already being developed, is introduced, it has the potential to unleash even greater gains for the sugar industry. READ MORE