by The India ethanol market involves the production of fuel grade ethanol that can be blended with gasoline. Ethanol is primarily produced from sugarcane and grains such as corn, wheat, barley, etc. Ethanol is gaining popularity as an alternative fuel and fuel additive which can help reduce dependency on crude oil imports and lower greenhouse gas emissions. Ethanol fuel has a higher octane number than gasoline which allows for more efficient engine operation. Ethanol also burns more completely than gasoline, producing fewer undesirable emissions.
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, as highlighted in a new report published by CoherentMI.
Market Dynamic:
One of the key drivers for the India ethanol market is the increasing demand from the transportation sector. The Indian government has implemented the Ethanol Blended Petrol (EBP) Program that mandates the blending of ethanol with gasoline to reduce import dependence and provide alternative crop markets for sugarcane farmers. Under the new program, the blending percentage has increased from 5% to 20% by 2030. This is expected to boost ethanol demand in the country from 1.4 billion liters in 2018-19 to 5 billion liters by 2030. Higher blending rates will require increased production of fuel grade ethanol which is influencing investments in new distilleries and capacity expansions.
Another driver for the market is the ease of availability of raw materials for ethanol production. Sugarcane is abundantly cultivated in many states of India such as Uttar Pradesh, Tamil Nadu, Karnataka, and Maharashtra which allow for ready access to sugarcane molasses, the primary raw material used for ethanol production. An abundant supply of raw materials at competitive prices supports the potential for further capacity additions in the Indian ethanol sector.
Segment Analysis:
The India ethanol market is segmented into grain-based ethanol and molasses-based ethanol. Molasses-based ethanol dominates the market with over 80% share as it is more affordable to produce compared to grain-based ethanol. Grain-based ethanol production puts additional burden on food grain supply and is less suitable for the Indian context currently.
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
PEST Analysis:
Political: The Government of India has promoted ethanol blending with petrol from 1% to 10% by 2030 under its Ethanol Blended Petrol (EBP) Programme to reduce import dependence and emissions. Various ethanol pricing policies have benefitted sugarcane farmers and distilleries.
Economic: Ethanol is a strategic alternative to fossil fuels that will lower trade deficit from oil imports. As a biofuel, it supports income generation in the agricultural sector and rural employment. Inflation in petrol prices boosts the case for ethanol adoption.
Social: Use of ethanol instead of petrol mitigates air pollution concerns in cities and its production from sugarcane supports farmers’ livelihoods in major cultivating states. However, food versus fuel debates occur around grain-based ethanol methods.
Technological: Molasses-based ethanol production technology is mature and widely used. Process innovations to utilize cellulosic biomass for next-gen grain-based or non-grain based ethanol are attracting research interest to boost yields.
Key Takeaways:
The India Ethanol Market Size is expected to witness high growth at a CAGR of 15% during the forecast period of 2023-2030.
Regional analysis suggests that the southern states of Tamil Nadu, Karnataka and Andhra Pradesh will be the fastest growing regional markets owing to large sugarcane cultivation. The southern states of Tamil Nadu, Karnataka and Andhra Pradesh are expected to be the fastest growing regional markets for India’s ethanol sector due to their large sugarcane cultivating areas. Molasses produced as a byproduct is used widely for ethanol production, providing raw material security.
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.
*Note:
1.Source: CoherentMI, Public sources, Desk research
2.We have leveraged AI tools to mine information and compile it
