India’s ethanol programme has crossed a significant milestone, with cumulative supplies exceeding 800 crore litres during Ethanol Supply Year (ESY) 2025-26. The latest data from the All India Distillers’ Association (AIDA) also shows a clear change in the country’s ethanol supply mix, with grain-based feedstocks taking a much larger role than sugarcane.
The milestone comes as India pushes ahead with its ethanol blending programme, aimed at reducing dependence on imported crude oil, improving energy security and creating an additional market for agricultural produce. But the industry is now confronting a different problem: ensuring that the rapidly expanding ethanol supply is matched by sufficient demand.
According to AIDA data, ethanol supplies during July stood at 93 crore litres, taking cumulative supplies for ESY 2025-26 beyond the 800-crore-litre mark. Grain-based ethanol accounted for about 71 crore litres, or 76% of July supplies. The share was higher than the approximately 73% recorded in June, even though total monthly supplies were lower in July.
The shift is important because ethanol production in India has traditionally been closely linked to the sugar industry. Increasing use of grains means the country is building a more diversified feedstock base, reducing its dependence on sugarcane and giving distilleries greater flexibility in sourcing raw material.
Maize and surplus Food Corporation of India (FCI) grains have emerged as important contributors to this transition. Data reported from AIDA shows that maize and surplus FCI grains each contributed around 30 crore litres to July’s grain-based ethanol supplies.
This change also comes at a time when the economics of sugar and ethanol are shifting. India is dealing with concerns over sugar availability and prices after weaker rainfall in key producing states. The government is considering changes to the use of sugarcane for ethanol in the next supply year, potentially encouraging greater use of maize and rice-based feedstocks instead.
The development could make grain-based ethanol even more important for the country’s E20 blending target. India has already moved towards petrol containing up to 20% ethanol, creating a large and assured market for biofuel producers. The broader objective is to replace a portion of petrol consumption with domestically produced ethanol.
The expansion of grain-based ethanol also has implications for farmers. Maize has become an increasingly important feedstock, creating an additional source of demand beyond traditional uses such as animal feed and food processing. A diversified ethanol market can therefore provide farmers with another avenue to sell their produce.
However, higher production capacity by itself does not guarantee that the industry will remain profitable. The next challenge is demand. As ethanol availability rises, oil marketing companies and other potential users need to absorb the additional volumes. The Times of India report highlights this emerging gap between the industry’s ability to produce ethanol and the pace at which demand is developing.
That issue could become more important as India continues adding distillation capacity. If production grows faster than procurement and blending requirements, producers could face pressure on utilisation levels and margins. For the government, maintaining a predictable procurement framework will therefore be important to keep investment flowing into the sector.
The changing feedstock pattern also offers some protection against supply shocks. In June, grain-based ethanol accounted for roughly 75% of supplies, with 75 crore litres supplied from grains out of total monthly supplies of 103 crore litres. By July, grain-based supplies remained dominant at 71 crore litres out of 93 crore litres.
Earlier AIDA data had already shown the growing importance of grains. By June, cumulative ethanol supplies had reached 717 crore litres, against contracted volumes of 1,048 crore litres. Grain-based ethanol accounted for 480 crore litres, or nearly 67% of total supplies at that stage, while sugarcane-based sources contributed 238 crore litres.
The numbers indicate how quickly India’s ethanol supply chain has evolved. Maize has moved to the centre of the biofuel ecosystem, while surplus food grains and sugar-based feedstocks continue to provide additional sources.
For the government, the programme serves several objectives at once. Higher ethanol blending can help reduce petrol imports, strengthen energy security and support agricultural markets. For sugar mills and distilleries, ethanol offers an alternative revenue stream, while grain-based production creates demand for crops such as maize.
The 800-crore-litre milestone therefore represents more than a production figure. It shows that India has built significant capacity to supply ethanol at scale. The bigger test now is whether consumption, blending and procurement can keep pace with that capacity.
