Govt approves ₹4,687 crore to fuel India's ethanol push

The government has approved a total budget outlay of Rs 4,687 crore towards the payment of interest subvention to the eligible projects under the various ethanol interest subvention schemes, minister of state for petroleum and natural gas Suresh Gopi told the Rajya Sabha on Monday.

The government has approved a total budget outlay of Rs 4,687 crore for interest subvention. Between FY23 and FY27 (up to July 2026), it released Rs 2,075 crore to NABARD, with almost the entire amount utilised. It also continues to support second-generation biofuel projects under the Pradhan Mantri JI-VAN Yojana, which provides assistance of up to Rs 150 crore for commercial-scale projects.

India now has 478 ethanol production plants with a combined annual capacity of 2,019 crore litres. The government said Maharashtra leads the country with 145 distilleries and an annual production capacity of 389 crore litres, followed by Uttar Pradesh with 79 distilleries and 344 crore litres, and Karnataka with 50 plants and 321 crore litres. Nationwide, there are 478 distilleries with a combined capacity of 2,019 crore litres.

Replying to a question in the Rajya Sabha, Gopi said public sector oil marketing companies have been consistently blending 20% ethanol in petrol across the country since December 2025, achieving the government's E20 target.

Investments of Rs 1 lakh crore on ethanol

On July 10, rhe ministry of petroleum and natural gas said that reverting to E10, a fuel blend comprising 90% petrol and 10% ethanol, would jeopardise investments of nearly ₹1 lakh crore per year in ethanol production and associated infrastructure financed by public sector banks.

“Over the past several years, public sector banks have financed nearly ₹1 lakh crore/yr of investments in ethanol production and associated infrastructure,” the government said, adding that dedicated ethanol plants, distilleries, storage facilities and logistics networks have been created to meet India's blending targets.

“If, after creating this capacity, we were to arbitrarily revert to E10, what happens to these investments? What happens to the surplus production capacity? What happens to thousands of crores invested by farmers, cooperatives, entrepreneurs, financial institutions and public sector companies in good faith based on a national policy?” the petroleum ministry asked.