The policy intent is real. The National Policy on Biofuels 2018 (amended 2022) lays emphasis on ethanol production. 

But this momentum entails a corollary effect: the major crops used for ethanol production – maize and sugarcane – require large amounts of water. Besides maize and sugarcane, the other crop that is used to produce ethanol is rice.

India is already staring at a below-normal monsoon after nearly 11 years, with the India Meteorological Department (IMD) forecasting 92% of long-term average rainfall for this season.

Alternative Energy Sources

This has put the government in a quandary. While the need of the hour is to focus on alternative energy sources, an increase in ethanol production is likely to intensify the water crisis in India. 

Sample this. 

About three kilograms of rice are required to produce one litre of ethanol, and producing one kilogram of rice requires 3,000 to 5,000 litres of water. This means about 10,000 litres of water being used for one litre of ethanol. In comparison, maize requires 4,670 litres, and sugarcane requires 3,630 litres of water per litre of ethanol. 

According to Vijendra Singh, President of the All India Distillers’ Association (AIDA), maize has emerged as the main raw material, accounting for about 48% of total ethanol production. A total of 718 crore litres of ethanol has been produced from grain-based feedstock, including maize and rice, while 321 crore litres have been supplied from sugarcane-based feedstock. 

Currently, E20 blending is mandatory in the country, which requires 1,050 crore litres of ethanol. However, to achieve the government’s target of 100% ethanol blending, production will need to increase five-fold, which requires policy changes. 

Jitendra Thakkar, Managing Director of the Gujarat State Federation of Co-operative Sugar Factories Limited, told The Secretariat, “Sugarcane alone yields limited quantities of ethanol, and efforts are under way to produce larger volumes from rice, maize and other feedstock.”

On one hand raw material supplies is a cause for concern and on the other, infrastructure gaps continue.

Raw Materials

Currently, grain-based ethanol contributes about 70% of ethanol production, and sugarcane contributes 30%. 

In the context of the Ethanol Blended Petrol (EBP) programme, Union Minister for Road Transport and Highways Nitin Gadkari had earlier indicated that India should aim to achieve 100% ethanol blending to become self-reliant in the energy sector.

To achieve future targets, a clear roadmap will be required for increased ethanol production. In this regard, the Indian Sugar Mills Association has stated that the production of sugarcane, rice, and maize will need to be increased.

Deepak Ballani, Director General of the Grain Ethanol Manufacturers Association, told The Secretariat, “Accelerating ethanol blending is a strategic move in the context of rising crude oil prices and changing global energy dynamics.” 

“Faster rollout and wider acceptance of flex-fuel vehicles, along with GST rationalisation to facilitate demand creation, would be essential policy support measures. Such policy alignment would also strengthen the financial position of sugar mills,” he said. 

Challenges For Blending 

As India moves beyond E20, the challenge is no longer supply but creating a stable and widespread demand.

The flip side to higher ethanol blending targets is that it would not be feasible in water-scarce states. Moreover, producing ethanol from grains may put pressure on the food supply and land use, as agricultural land is used for fuel crops. E20 petrol may reduce mileage in some older vehicles.

Further, the cost of setting up distilleries is very high, requiring major investment for new plants.

Production Over The Decade

In 2014, ethanol production in the country was only 200 crore litres, and petrol blending was at 1.55%. This increased to 10% in 2022 and 20% in 2025. This means that 1,039 crore litres of ethanol is required for this level of blending. However, if blending increases to E85 or E100, production of about 10,000 crore litres will be required. According to official data, ethanol production in the country has now reached 1,950 crore litres.

The government is encouraging increased use of crops such as sugarcane, maize, broken rice, wheat, crop residues, and bamboo for ethanol production. It has also been providing subsidies for new distilleries, low-interest loans, encouraging private investment, and promoting the establishment of second-generation ethanol plants for the development of the distillery and biofuel industry. 

According to C.K. Jain, President of the Grain Ethanol Manufacturers’ Association (GEMA), India’s ethanol production capacity has reached 2,000 crore litres and is expected to increase further under the government’s ethanol programme. 

“Ethanol is a renewable fuel because it is produced from crops such as sugarcane and grains that can be cultivated annually. However, ethanol production requires substantial quantities of water,” he said. 

State-Level Implementation

Blending ethanol with petrol is becoming an important development tool for different states. However, the capacity, advantages, and disadvantages differ from state to state. 

States such as Uttar Pradesh, Maharashtra, Karnataka, Gujarat, Tamil Nadu, Haryana, and Punjab, where sugarcane is produced, can easily produce ethanol from molasses and sugarcane. 

Assam, Haryana, Punjab, and Maharashtra have potential for biomass-based ethanol production.

The Global Picture

Globally, ethanol is mainly used as a transport fuel. Brazil uses blending up to 30%, the United States uses 10%, and India uses 20%. Ethanol is also used in chemical industries, as a solvent, and in the paint, plastic, and pharmaceutical sectors. It is also used in alcoholic beverages and as a food preservative. 

In the US, maize is the main source of ethanol, while Brazil uses sugarcane. China uses grain-based ethanol, and the EU produces ethanol from sugarcane and wheat.

While ethanol blending is crucial to enhance energy security, reduce crude oil imports, lower pollution, and increase farmers’ income, it can severely impact water resources, increasing water scarcity through usage. Advance planning for irrigation water is necessary.

According to the Central Water Commission’s April report, reservoir levels have fallen across India, with water storage plunging to below 40 percent. 

Several states are already under water stress. According to data from IMD and the Central Ground Water Board for 2025, Maharashtra reported 40% below normal rainfall, 19 districts of Punjab have over-exploited groundwater, and Karnataka is facing an urban water crisis.

Under the circumstances, clearly the Centre would have to put in place a well thought out policy plan to boost ethanol production.