India’s ethanol manufacturing capacity—often mischaracterised as “overcapacity”—is in fact a strategic national asset built through deliberate policy direction and long-term planning, the Grain Ethanol Manufacturers’ Association (GEMA) said on Wednesday.

The current capacity landscape, GEMA emphasised, is not the result of speculative expansion but a direct outcome of sustained and credible policy signals under the Government of India’s Ethanol Blending Programme (EBP). Far from being a terminal target, the 20 per cent blending level was always intended as a policy checkpoint—to assess feedstock sufficiency, investor readiness, rural impact, and system preparedness—rather than an endpoint.

India’s ethanol roadmap has consistently pointed toward higher blending levels, accelerated adoption of Flex-Fuel Vehicles (FFVs), and convergence with global benchmarks such as Brazil, where ethanol substitutes nearly 55 per cent of petrol consumption. Industry investments were therefore made in alignment with this long-term trajectory, not short-term procurement cycles.

The national gains from ethanol blending are already tangible. In FY 2024–25 alone, the programme delivered an estimated Rs 40,000 crore in foreign exchange savings while channeling nearly Rs 50,000 crore into the rural economy. Higher farm incomes, expanded rural employment, and stronger agri-based value chains have followed, underscoring ethanol’s dual role as an energy-security instrument and a rural growth engine. India, GEMA noted, remains a surplus grain nation, fully capable of balancing food security with clean fuel production.

Commenting on the issue, Dr. C.K. Jain, President, Grain Ethanol Manufacturers’ Association (GEMA), said: “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.”

According to GEMA, expanding demand through higher ethanol blending mandates, faster rollout of FFVs, rapid development of ethanol dispensing infrastructure, and rationalisation of GST and VAT on ethanol could unlock up to Rs 2 lakh crore in annual foreign exchange savings, against India’s oil import bill of nearly Rs 22 lakh crore.

The capacity is built. The capital is invested. What remains is a policy push to unlock consumption—and with it, the next phase of India’s energy transition.