India's ethanol industry is entering a significant growth phase as the government's push towards higher ethanol-blended fuels and flex-fuel vehicles gains momentum. According to ET Now reports, Atul Mulay, President of Praj Industries, described the current period as an "inflection point" for the ethanol industry, highlighting the government's commitment to expanding ethanol-compatible infrastructure. The Petroleum Ministry has already outlined plans to gradually increase the number of E85 fuel stations, while vehicle manufacturers are preparing ethanol-compatible models across both two-wheeler and four-wheeler segments. Recently, the Union government exempted higher ethanol-petrol blends (22%-30% ethanol) from central excise duty, putting their tax treatment on a par with the 20% ethanol blend (E20) that's currently the standard at pumps.
Addressing concerns around delayed ethanol capacity expansion projects, Mulay indicated that policy support and the government's long-term commitment to ethanol are likely to improve lender confidence. As reported by ET Now, several projects had faced execution delays due to funding-related challenges, but he expects banks and financial institutions to take a more favourable view as the ethanol ecosystem matures. "Financial institutions and banks are seeing the direction of government policy, the focus on energy security and the development of the ecosystem. This should ease the funding environment for projects that were awaiting clearances," Mulay stated.
Contrary to industry concerns about feedstock availability, Mulay believes India currently has sufficient ethanol supplies and does not face an immediate raw material shortage. According to ET Now reports, "As of now, we have surplus ethanol availability. Feedstock availability is not expected to be a major challenge until 2030 or 2031." He added that AI-led initiatives could increase sugarcane productivity by 30% to 35% from existing cultivation areas, addressing long-term feedstock requirements. The government's National Policy on Biofuels, 2018 (Amended 2022) aims to promote sustainable biofuel development while ensuring feedstock sustainability and protecting food and water security.
Praj Industries expects the next wave of ethanol demand to be driven by flex-fuel vehicle adoption, with India's earlier ethanol blending programme requiring approximately 1,000-1,200 crore litres of capacity over four to five years. As reported by ET Now, Mulay estimates that by 2030, an additional 1,200 to 1,400 crore litres of ethanol capacity could be required, depending on flex-fuel adoption pace. New ethanol facilities in the upcoming investment cycle could involve project costs ranging between ₹170 crore and ₹225 crore per unit. The government's transition beyond E20 fuel can strengthen energy security, reduce crude oil imports, and support climate goals, though long-term success will depend on ensuring feedstock sustainability and developing a robust biofuel ecosystem.
While Praj Industries did not disclose fresh order-book figures, Mulay suggested that industry sentiment has improved significantly in recent months. According to ET Now reports, "The environment is becoming more conducive. Greater clarity around policies and the overall ecosystem gives us confidence that activity is moving in a positive direction." The company continues focusing on its GenX modular plant solutions for international markets, with the objective of providing modular plants that minimize both time and cost in foreign markets.
