India’s Biofuel Push Saves ₹1.44 Lakh Crore Forex, Achieves 19% Ethanol Blending

At the heart of India’s biofuel strategy is the Ethanol Blended Petrol (EBP) Programme, launched under the National Policy on Biofuels.

The Government of India has achieved remarkable milestones in promoting biofuels as a sustainable alternative to petroleum products, said Union Minister of Petroleum and Natural Gas Shri Hardeep Singh Puri in a written reply to a starred question in the Lok Sabha today.

Highlighting the country’s rapid progress in ethanol blending, biodiesel promotion, and advanced biofuels development, Shri Puri said that India’s biofuel journey is simultaneously addressing energy security, climate change, rural prosperity, and reduced crude oil dependency.

Success of the Ethanol Blended Petrol (EBP) Programme

At the heart of India’s biofuel strategy is the Ethanol Blended Petrol (EBP) Programme, launched under the National Policy on Biofuels. Ethanol, as a green fuel, supports India’s environmental sustainability goals, reduces crude imports, and benefits farmers by creating a reliable domestic market.

Key achievements under the EBP Programme include:

• ₹1,25,000 crore direct payments to farmers between Ethanol Supply Year (ESY) 2014-15 and July 2025.

• ₹1,44,000 crore in foreign exchange savings, thanks to reduced crude oil imports.

• Net CO₂ reduction of 736 lakh metric tonnes, a significant contribution to India’s climate commitments.

• 244 lakh metric tonnes of crude oil substitution, reducing dependency on international markets.

Shri Puri noted that the blending target of 10% ethanol in petrol was achieved in June 2022, five months ahead of schedule. Since then, blending levels have increased rapidly:

• 12.06% in ESY 2022-23

• 14.60% in ESY 2023-24

• 19.05% as of 31 July 2025, during the current ESY 2024-25

• 19.93% blending achieved in July 2025 alone

This trajectory puts India firmly on course to achieve 20% blending well ahead of the 2025-26 deadline.

Policy Support for Ethanol Expansion

To boost ethanol production and ensure steady supply, the Government has introduced a range of policy measures, including:

• Expansion of feedstocks for ethanol production (sugarcane, grains, molasses, crop residue, etc.).

• Administered pricing mechanism for ethanol procurement by oil marketing companies (OMCs).

• Reduced GST rate of 5% on ethanol used in blending.

• Ethanol Interest Subvention Schemes (2018–22) to promote investment in distilleries.

• Dedicated scheme for cooperative sugar mills to convert single-feedstock plants into multi-feedstock facilities.

• Long-Term Offtake Agreements (LTOAs) between OMCs and ethanol producers.

• Improved logistics, including multimodal transport and expanded storage capacity.

Advanced Biofuels: Pradhan Mantri JI-VAN Yojana

In addition to first-generation ethanol, the Government is actively promoting advanced biofuels through the Pradhan Mantri JI-VAN (Jaiv Indhan–Vatavaran Anukool Fasal Awashesh Nivaran) Yojana, launched in 2019 and amended in 2024.

• The scheme has an outlay of ₹1,969.50 crore.

• ₹1,800 crore is earmarked for commercial-scale projects.

• ₹150 crore supports demonstration-scale projects.

• Feedstocks include lignocellulosic biomass and crop residue, helping reduce stubble burning and air pollution.

The initiative also:

• Provides farmers with income from agricultural residues.

• Creates rural and urban employment opportunities.

• Aligns with the Swachh Bharat Mission by tackling waste management challenges.

Biodiesel Promotion

Beyond ethanol, the Government is also pushing biodiesel adoption. Measures include:

• Setting an indicative blending target for biodiesel in diesel.

• Issuing Guidelines for Sale of Biodiesel for Blending with HSD (2019).

• Reducing GST on biodiesel procurement for blending from 12% to 5%.

Commitment to Energy Security and Sustainability

Shri Puri reaffirmed that the Government is fully committed to strengthening India’s biofuel ecosystem, which directly contributes to:

• Energy security by lowering crude import dependency.

• Farmer prosperity through assured offtake of agricultural produce.

• Climate action with reduced greenhouse gas emissions.

• Economic savings, ensuring that public resources are better utilised.

“With record ethanol blending levels, expanded policy support, and a clear focus on advanced biofuels, India is well on its way to becoming a global leader in bioenergy, supporting both sustainable growth and the vision of an Atmanirbhar Bharat,” Shri Puri concluded.