Ethanol is a biofuel produced by fermentation of sugars that can be used as a biofuel or as a fuel additive. Government mandates such as increased blending of ethanol in petrol are driving the growth of the India ethanol market. The blending of fuel-grade ethanol into gasoline helps reduce vehicular emissions and dependence on fossil fuels. Ethanol can be produced from various feedstocks such as sugarcane molasses, damaged food grains and cellulosic materials.

The India ethanol market is estimated to be valued at US$ 2.43 Bn or Billion in 2023 and is expected to exhibit a CAGR of 15% over the forecast period 2023-2030, as highlighted in a new report published by CoherentMI.

Market Dynamics:

One of the key drivers for the growth of the India ethanol market is the increasing blending mandates by the government. The government has progressively increased the blending percentage of fuel-grade ethanol with petrol over the years. In 2018-19 the mandated blending percentage was 5% which was then increased to 10% in 2021-22 and further extended to 20% blending by 2025. This is being done to reduce import dependence on crude oil and shift to more environment-friendly biofuels. Higher blending percentages will necessitate higher ethanol production volumes in the country.

Another driver for the market is favorable policies and initiatives launched by the government. The government has announced an interest subvention scheme for enhancement and augmentation of ethanol production capacity. It provides financial assistance to project developers for setting up grain-based distilleries for producing first generation (1G) ethanol. Recently in 2021, the government launched the E-100 pilot project to promote the use of 100% ethanol-blended fuel in select districts. Such initiatives and policies are creating a conducive environment for ethanol production and consumption in India.

SWOT Analysis:

Strength: The India ethanol market has strong support from the government through subsidy support and policies promoting blending. A favorable regulatory framework is mandating sugar mills and distilleries to produce ethanol from B-heavy molasses and sugarcane juice. Moreover, surplus sugar production in the country provides ample feedstock to boost ethanol production.
Weakness: High dependency on monsoon rains impacts sugarcane production and availability of feedstock. Moreover, limited availability of technology for cellulosic ethanol production hinders the development of next-generation biofuels.
Opportunity: Growing focus on reducing fossil fuel imports and environmental pollution will boost investments in alternative fuels. The introduction of E100 dispensing pumps provide an opportunity to displace MS and HSD over the long-run. Increasing blends of fuel-grade ethanol in gasoline presents new avenues.
Threats: Competition from other biofuels industries can hamper the market's growth. Moreover, volatility in feedstock prices and changes in government policies pose threats.

India Ethanol Market Segmentation:

  • By Source:
  • Molasses
  • Sugar Cane Juice
  • Grains
  • Others
  • By End Use:
  • Fuel
  • Industrial Solvents
  • Beverages
  • Cosmetics
  • Pharmaceuticals
  • Automotive
  • Others
  • By Grade:
  • Denatured Alcohol
  • Undenatured Alcohol
  • Rectified Spirit
  • Specially Denatured Alcohol
  • Fuel Ethanol
  • By Blending:
  • E5
  • E10
  • E15
  • E20
  • E25
  • E70
  • E85
  • E95
  • By Application Method:
  • Starch-based
  • Sugar-based
  • Cellulosic

Key Takeaways:

The India Ethanol Market Size is expected to witness high growth. The India ethanol market is estimated to be valued at US$ 2.43 Bn in 2023 and is expected to exhibit a CAGR of 15% over the forecast period 2023-2030.

Regional Analysis:

The northern and western regions dominate India's ethanol market backed by higher sugarcane cultivation. States like Uttar Pradesh, Maharashtra, Karnataka, and Gujarat account for over 70% of the country's ethanol production.

Key Players:

Key players operating in the India ethanol market are Piccadily Sugar & Allied Industries Ltd., Thiru Arooran Sugars Ltd., Ugar Sugar Works Ltd., Dhampure Speciality Sugars Ltd., Praj Industries, Triveni Engineering & Industries Ltd, E.I.D. Parry (India) Ltd., DCM Shriram Ltd., Mawana Sugars Ltd., Uttam Sugar Mills Ltd., Kothari Sugars And Chemicals Ltd., Avadh Sugar & Energy Ltd., The Ugar Sugar Works Ltd., Dwarikesh Sugar Industries Ltd., K.M.Sugar Mills Ltd., Shree Renuka Sugars, Balrampur Chini Mills Ltd., Bajaj Hindusthan Sugar Ltd., Dalmia Bharat Sugar and Industries Ltd., Dhampur Sugar Mills Ltd.

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