India’s latest vision to push cars to run on Ethanol, made from sugar is a move that involves the risk of raising the cost of the plant globally. 

According to the food ministry, the government is expected to launch an Ethanol program that will channel about 6 million tons of sugar to fuel production by 2025. This number is dangerously close to the entire amount that India exports to the global market. 

Steps taken by Govt to push the use of Ethanol blend (E20)

In June 2021, P.M Narendra Modi progressed to a target for blending 20 % ethanol in gasoline to the objective year of 2025, almost five years ahead of the initial progression. The vision comes with multiple advantages such as less air pollution, reduction in India’s oil import bills and an increase in rural area investments. While this might be an optimistic step in disguise to the Indian government, for the rest of the world it might be the biggest change in a long time for the sugar industry. Since 2017, prices have hiked to the highest in the middle of a supply crunch, a crisis for which the wild weather in Brazil is responsible for. Therefore a further rise will add up to food inflation risks, making it a global problem.

Rahil Shaikh, Managing director of Meir Commodities India Pvt, India based trading company made his statement on the matter. He said that while this is good news internationally if India opts a shift to sugar to produce more Ethanol, an eventual growth in demand will force some countries including India to expand its cane production. 

According to oil secretary Tarun Kapoor, in order to meet its 2025 target, India will have to almost triple ethanol production to about 10 billion litres a year. This will require $7 billion of funding and the task might be to create the type of capability wished in a brief span of 3 to 4 years. The government is on a mission to offer financial support to sugar mills to set up or increase distilleries. Companies which include Balrampur Chini Mills Ltd. will forestall generating sugar at a few turbines and start processing cane juice to make ethanol instead.

According to the Press Trust of India, India will also produce a flexible engine based on ethanol. Due to its high crude oil content, increasing the use of biofuels in transportation may reduce India’s economic burden. The government estimates that this will help the third-largest oil importer save US$4 billion annually.