Cheaper Petrol Through Ethanol or Costlier

Sunil Goyal

Senior Accredited Journalist & Research Scholar,

The Government of India has projected its ethanol blending programme as a major achievement in strengthening energy security, reducing crude oil imports, saving foreign exchange and improving farmers' incomes. By amending the National Policy on Biofuels, 2018, the target of achieving 20% ethanol blending in petrol was advanced from the original deadline of 2030 to the Ethanol Supply Year (ESY) 2025-26. According to the government and industry sources, India reached this milestone ahead of schedule. Data from the Ministry of Petroleum and Natural Gas indicate that ethanol blending increased from around 1.5% in 2014 to nearly 15% by 2024, with the average blending during 2024-25 estimated between 17% and 19%, touching nearly 19.9% by July 2025. Government reports further highlight substantial savings in crude oil imports and foreign exchange as key benefits of the programme.

These achievements undoubtedly represent significant progress in India's energy policy. However, as a responsible society, we must also ask whether these gains are coming at the cost of crop diversity, affordable food and the country's long-term food security. This question deserves to be at the centre of public policy discussions.

The National Biofuel Policy and subsequent guidelines have encouraged large-scale ethanol production from molasses, sugarcane juice, sugar syrup, maize, rice, broken rice and surplus rice released by the Food Corporation of India (FCI). According to the Roadmap for Ethanol Blending in India 2020-25, approximately 10 billion litres of ethanol annually would be required to achieve 20% blending by 2025-26. To meet this demand, sugarcane-based ethanol production capacity has been expanded significantly, while grain based ethanol capacity has also increased substantially. This effectively means that crops traditionally grown for food and livestock feed are increasingly being diverted towards industrial fuel production.

Government pricing policies strongly influence farmers' cropping decisions. A fixed procurement price for ethanol and a concessional GST rate of 5% have made supplying maize and rice for ethanol production financially attractive. In contrast, pulses, oilseeds, and other nutritionally important crops have not received similar policy incentives. Independent analyses suggest that favourable pricing for grain-based ethanol, particularly maize has encouraged farmers to shift towards crops used in biofuel production.

International organisations, including the Food and Agriculture Organization (FAO), have repeatedly cautioned that large-scale conversion of food crops into biofuels can contribute to food inflation and food insecurity, particularly among vulnerable populations. In India, the growing use of maize and rice for ethanol has also altered the animal feed market by promoting by-products such as Distillers Dried Grains with Solubles (DDGS), reducing demand for conventional oil meals. This trend may discourage the cultivation of oilseed crops such as soybean, potentially affecting India's efforts towards edible oil self sufficiency. If farmers increasingly replace pulses and oilseeds with ethanol feedstock crops, the nutritional quality of the average Indian diet may gradually decline.

The economic benefits of reduced crude oil imports must also be evaluated from a broader perspective. While ethanol blending undoubtedly reduces dependence on imported petroleum, increased imports of food grains, livestock feed or edible oils could offset a substantial portion of the foreign exchange savings. Therefore, the net economic benefit may not be as significant as crude oil import figures alone suggest. Energy security should never be assessed in isolation from food and nutritional security.

Environmental sustainability also deserves careful consideration. Sugarcane, one of the principal feedstocks for ethanol, is an extremely water intensive crop. Several studies estimate that producing one tonne of sugarcane may require 60-70 tonnes of water, placing enormous pressure on groundwater resources, especially in water stressed regions. Expansion of monoculture cultivation of sugarcane and maize can adversely affect soil health, biodiversity, and long term agricultural sustainability. Using scarce land and water resources primarily for fuel production could intensify environmental stress in regions already facing irrigation challenges.

Perhaps the most important concern is the impact on low income households and nutritional security. Food inflation disproportionately affects poor and lower-middle income families because food accounts for the largest share of their household expenditure. If ethanol policies contribute to higher prices of cereals, pulses, and edible oils, access to nutritious food will become increasingly difficult, potentially worsening malnutrition and public health outcomes. In a country where nutritional indicators continue to be a matter of concern, limiting the discussion to fuel prices and foreign exchange savings would be an oversimplification.

From a public policy perspective, the time has come to rebalance India's ethanol strategy. Clear limits should be established on the use of essential food crops for ethanol production. Staple cereals, pulses and oilseeds should be prioritised under a 'Food First' approach. Greater emphasis should be placed on second generation biofuels produced from agricultural residues, non-food biomass and cellulosic feedstocks, thereby reducing the conflict between food and fuel. Simultaneously, minimum support prices, subsidies and agricultural credit policies should be redesigned to ensure that farmers continue to cultivate nutritionally important crops instead of shifting disproportionately towards ethanol feedstocks.

Energy security is undeniably important, but it cannot be pursued at the expense of food security, environmental sustainability and farmers' long-term interests. If this balance is not maintained, India may ultimately discover that cheaper petrol has come at the cost of more expensive food, poorer nutrition and a less resilient agricultural system. That would be a price no responsible nation should be willing to pay.

(Expert Opinion)

The author is a senior accredited journalist and research scholar with extensive experience in higher education, agricultural policy, legal affairs, and public administration. His work includes research and policy analysis on significant judicial decisions, food security, energy policy and international standardisation practices, including ISO frameworks. The views expressed are based on independent research and analysis.

Sunil Goyal

Visiting Faculty

Centre For Peace Studies Srilanka

Accredited freelance Journalist

Central Chronicle

Editor Gwalior Sandesh

Research Scholar

(Former)Public Relation Officer

Amity University MP India

Mob:+91-9827353578

E: sunil.geenews@gmail.com

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