Ethanol Industry's Struggle: A Crisis of Excess

NEW DELHI — The burgeoning ethanol industry in India is facing a paradox: a glut in production that surpasses demand, leading to significant losses for producers. Ajay Singh, who operates an ethanol plant in eastern India, expresses his frustration over government oil companies not meeting contractual ethanol purchasing obligations.

The Ethanol Blending Programme, crucial to cutting India's oil imports and emissions, sees state-run firms mixing ethanol with petrol. While India hit its ethanol blending target ahead of schedule, producers now grapple with oversupply. Ethanol bids for the 2025-26 supply year far exceeded the oil companies' needs, creating a financial squeeze for businesses like Singh's.

This excess supply has sparked legal battles. VINP Distilleries and Sugars sued oil marketing companies for changing procurement rules, compromising long-standing agreements. Despite global biofuel debates, experts predict a rise in India's ethanol production. The industry advocates for policies to stimulate demand, including tax incentives and policy adjustments.