New Delhi: India saved ₹40,000 crore in foreign exchange during FY 2024–25 through ethanol blending, while nearly ₹50,000 crore flowed into the rural economy, according to the Grain Ethanol Manufacturers’ Association (GEMA). The industry body said higher ethanol blending levels could unlock additional foreign exchange savings of up to ₹2 lakh crore annually, against an oil import bill of nearly ₹22 lakh crore.
In a statement released on Wednesday, GEMA said the ethanol blending programme has emerged as a key intervention for reducing India’s dependence on crude oil imports, while simultaneously supporting farmers, agri-processing units and domestic manufacturing. The association said ethanol manufacturing capacity built over recent years should be viewed as a strategic national asset created in response to clear and consistent policy signals from the government.
Capacity built on long-term policy signals
GEMA said investments in ethanol capacity were undertaken in anticipation of long-term demand growth, aligned with the government’s 20 per cent blending target and the expected rollout of flex-fuel vehicles. The association said ethanol capacity creation was never intended to respond only to short-term procurement cycles, but to support a sustained transition in India’s transport fuel mix.
The industry body said the 20 per cent blending target should be seen as a milestone rather than the end point of the programme, allowing policymakers and industry to assess readiness across feedstocks, vehicle compatibility and distribution infrastructure.
“Ethanol capacity was created in response to a clear national mandate. The need of the hour is to expand demand, not contract capacity, so that the full economic, rural and environmental benefits of the programme can be realised,” said Dr C K Jain, President, Grain Ethanol Manufacturers’ Association.
Rural economy and grain surplus
GEMA said ethanol blending has played a role in strengthening rural income streams and employment generation, while supporting agri-based value chains. The association said India continues to remain a surplus grain nation, capable of meeting food security requirements while expanding clean fuel production.According to the industry body, ethanol blending has also helped reduce India’s exposure to volatile global oil prices, while channelling value addition within the domestic economy.
What determines the next phase?
GEMA said scaling up the economic gains from ethanol blending will depend on expanding demand through higher blending levels, faster adoption of flex-fuel vehicles, wider availability of ethanol dispensing infrastructure and rationalisation of GST and VAT on ethanol.
The association said coordinated action on these fronts can help multiply foreign exchange savings to ₹2 lakh crore annually, while reinforcing the ethanol blending programme as a long-term pillar of India’s energy transition and rural economic strategy.
