India's ethanol industry is preparing for a fresh round of investments as the government moves to accelerate the regulatory framework for higher ethanol blending, according to the All India Distillers Association (AIDA).

Speaking to Business Today, Bharati Balaji, Deputy Director General, AIDA, said the industry has already built substantial production capacity and is now looking for a clear roadmap on higher ethanol blends before committing to the next phase of expansion.

"Today, the industry is sitting on surplus capacity and is fully capable of supplying more ethanol," Balaji said.

India's installed ethanol production capacity currently stands at around 2,000 crore litres annually. For the Ethanol Supply Year (ESY) 2025-26, oil marketing companies (OMCs) are expected to procure nearly 1,100 crore litres. Even after accounting for an additional 300 crore litres that could be diverted to potable alcohol, pharmaceutical and chemical sectors, the industry would still have nearly 700 crore litres of surplus capacity available, she said.

The comments come as the government explores higher ethanol blends beyond the current programme, a move the industry believes could unlock the next phase of growth.

According to Balaji, the sector is ready to scale up investments, but long-term policy clarity remains critical.

"Distillers are prepared to invest further and expand capacities across the country, provided there is a clear roadmap for higher blending levels," she said.

The industry body estimates that ethanol blending has already delivered significant environmental benefits, including a reduction of nearly 8.69 lakh metric tonnes of carbon dioxide emissions.

Balaji said one of the biggest strengths of India's ethanol programme has been the government's decision to allow diversified feedstocks, enabling producers to utilise multiple raw materials depending on availability and economics.

India currently has around 370 distilleries engaged in ethanol production, many of which are evaluating future expansion plans as demand prospects evolve.

To accelerate adoption of higher ethanol blends, AIDA has also sought incentives for flex-fuel vehicles, including a reduction in GST and lower road and registration taxes by state governments. The association has also called for investments in fuel dispensing infrastructure and consumer-friendly ethanol pricing.

Beyond transportation fuels, the industry is also exploring new applications. Balaji said AIDA is studying the potential of ethanol-based cooking stoves as part of broader efforts to expand ethanol consumption avenues in the country.

Published on: Jun 15, 2026 4:35 PM IST