|
Forecast
Period
|
2026-2030
|
|
Market
Size, By Volume (2024)
|
3.5
Billion Litres
|
|
CAGR
(2025-2030)
|
6.82%
|
|
Fastest
Growing Segment
|
Second
Generation
|
|
Largest
Market
|
North
India
|
|
Market
Size, By Volume (2030)
|
5.14
Billion Litres
|
Market Overview
India
Bioethanol Market achieved the total volume of 3.5 Billion Litres in 2024 and is expected
to reach 5.14 Billion Litres by 2030 with a CAGR of 6.82% during the forecast
period. Bioethanol, primarily sourced from
biomass, serves as a blending agent in gasoline, enhancing fuel cleanliness and
reducing reliance on fossil fuels. Its main application is in blended fuels for
vehicles, but it is also utilized as a solvent and in chemical synthesis. The
Indian bioethanol market has seen considerable growth in recent years, fueled
by the country’s commitment to renewable energy, lowering greenhouse gas
emissions, and ensuring energy security.
As
of May 2024, India has successfully reached a 15% blending of ethanol in
petrol. The Indian government has set ambitious biofuel targets, seeking to
achieve a 20% ethanol blending by 2025 as part of the National Biofuel Policy,
which encompasses a range of production and procurement incentives.The focus on
the Ethanol Blending Program (EBP) has spurred increased investments in the
sector. India’s diverse agricultural landscape provides a robust supply of
feedstock, including sugarcane, corn, and biomass residues, with the sugar
industry playing a pivotal role in ethanol production. The surplus sugarcane
production has led to a rise in ethanol extraction from molasses.
Innovations
in production technologies, particularly second-generation bioethanol from
lignocellulosic biomass, are gaining traction, which could diversify feedstock
sources and enhance efficiency. However, challenges remain, such as the need
for improved supply chain logistics and infrastructure, as well as the impact
of feedstock price volatility on production costs and profitability. Scaling up
second-generation bioethanol production will require substantial investment and
technological know-how.
Despite
these challenges, the bioethanol market in India offers significant
opportunities, driven by a growing emphasis on renewable energy. With ongoing
government support, rising investments, and advancing technologies, the market
is poised for sustained growth, contributing positively to the country's energy
landscape and environmental objectives.
Key Market Drivers
Government Policies and
Regulations
Government
policies and regulations are pivotal in advancing the bioethanol market in
India. The National Biofuel Policy establishes clear targets for ethanol
blending in petrol, aiming for a 20% blend by 2025, which generates a
defined market demand and encourages investment in production facilities. The
Ethanol Blended Petrol (EBP) Programme has been implemented nationwide, with
the exception of the Union Territories of Andaman and Nicobar Islands and Lakshadweep,
where oil marketing companies (OMCs) sell petrol blended with 10% ethanol. This
policy provides a comprehensive framework for the development, production, and
utilization of biofuels, facilitating a shift towards sustainable energy
sources.
The
Pradhan Mantri JI-VAN Yojana supports the establishment of commercially viable
integrated bioethanol projects, focusing on second-generation (2G) technology
and the utilization of waste and cellulosic biomass. In August 2024, the
Government of India approved an extension of the modified Pradhan Mantri JI-VAN
(Jaiv Indhan- Vatavaran Anukool Fasal Awasesh Nivaran) Yojana for an additional
five years, extending its duration until 2028-29. The government also
indicated plans to explore the long-term impact of ethanol blending for
aviation turbine fuel (ATF) in the near future. The modified scheme
encompasses advanced biofuels derived from lignocellulosic feedstocks,
including agricultural and forestry residues, industrial waste, synthesis gas,
and algae. Additionally, “bolt-on” plants and “brownfield projects” are now
eligible, allowing them to leverage existing expertise to enhance their
viability. Furthermore, it supports the advancement of biofuel technologies
and aligns with the Make in India initiative, contributing to India’s ambitious
target of achieving net-zero greenhouse gas emissions by 2070. These subsidies
are designed to offset production costs, enhancing the competitiveness of
bioethanol against fossil fuels.
The
Goods and Services Tax (GST) on ethanol has been significantly reduced from 18%
to 5%, making it more accessible to consumers. Furthermore, there is a differential
pricing structure for ethanol based on the raw materials used in its
production. Policies that promote the cultivation of biofuel feedstocks, such
as sugarcane, provide farmers with additional income opportunities, potentially
including price guarantees or minimum support prices for these crops.
The
promotion of cooperative farming and production models enables smallholder
farmers to collaborate in bioethanol production, thereby enhancing economic
viability and community engagement. In August 2024, the Union government
announced a significant policy change, allowing sugar mills to utilize cane
juice or syrup for ethanol production in the upcoming Ethanol Supply Year (ESY)
2024-25, starting November 1, 2024. This new policy also permits the use of
B-Heavy and C-Heavy molasses for ethanol production and authorizes distilleries
to acquire up to 2.3 million metric tons of rice from the Food Corporation of
India specifically for this purpose, aimed at boosting ethanol output and
supporting blending strategies.
Stable
and consistent policies foster a predictable business environment that attracts
investment. Investors are more inclined to allocate resources to bioethanol
projects when they can count on long-term government support. The government is
also positioned to adapt its policies in response to market dynamics and
technological progress, ensuring that the bioethanol sector remains competitive
and aligned with national objectives. By establishing clear targets, offering
financial incentives, supporting infrastructure development, and encouraging
innovation, the government cultivates a favorable environment for investment
and growth. These initiatives not only advance the bioethanol sector but also
contribute to broader goals such as energy security, rural development, and
environmental sustainability.
Agricultural Surplus
Utilization
India
cultivates a variety of crops, including sugarcane, corn, and other
agricultural residues. Surplus yields from these crops can be efficiently
converted into bioethanol, preventing waste of excess agricultural output.
Sugarcane is particularly significant, with approximately 5 million hectares
dedicated to its cultivation. Traditionally, sugar serves as the primary
feedstock for bioethanol production. The diversity of available feedstocks,
encompassing both food and non-food crops, provides flexibility in production
and can help stabilize supply chains.
Converting
surplus agricultural products into bioethanol enables farmers to diversify
their income streams, which is especially advantageous during periods of low
market prices for food crops. The demand for feedstocks in bioethanol
production can stabilize prices for farmers, ensuring a reliable market for
their surplus. Utilizing agricultural surplus for bioethanol production reduces
waste and encourages sustainable agricultural practices, aligning with
environmental objectives and improving resource efficiency. This approach
fosters a circular economy, reintegrating agricultural by-products into the
economic system.
The
bioethanol sector also creates job opportunities in rural areas, spanning
farming, processing, and distribution, thus supporting local economies. As the
industry expands, it promotes skill development in agricultural practices,
processing technologies, and biofuel production techniques.
Government
initiatives like the Pradhan Mantri JI-VAN (Jaiv Indhan- Vatavaran Anukool
Fasal Awasesh Nivaran) Yojana encourage the cultivation of biofuel feedstocks,
motivating farmers to produce more raw materials for bioethanol, thereby
strengthening the supply chain. This scheme aims to enhance farmers’ incomes
from agricultural residues, address environmental pollution, generate local
employment, and improve India’s energy security and self-reliance.
By
utilizing agricultural surplus for bioethanol production, India can
significantly lower greenhouse gas emissions compared to fossil fuels,
reinforcing its environmental commitments. The availability of surplus
agricultural products also enables the scaling up of bioethanol production to
meet increasing domestic energy demands and potential export opportunities.
Overall, leveraging agricultural surplus for bioethanol production is a key
market driver that benefits farmers, supports rural development, and promotes
environmental sustainability. By capitalizing on excess agricultural output,
India can enhance its bioethanol production capacity, minimize waste, and
strengthen its energy security, making it an essential component of the
country's renewable energy strategy.
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Key Market Challenges
High Capital Costs
High
capital costs present a significant obstacle for the bioethanol market in
India. Setting up production facilities, such as distilleries and storage
units, requires substantial initial investment, which can discourage new
entrants and small-scale producers from entering the market. The implementation
of advanced technologies for efficient bioethanol production also entails
significant expenses for equipment and machinery. Additionally, high
operational costs encompassing labor, utilities, and maintenance can pressure
profitability, especially for new facilities that have not yet reached optimal
production levels. Variations in the prices of raw materials like sugarcane and
corn further complicate financial planning, impacting overall production costs.
Securing
funding for bioethanol projects poses a challenge, particularly for small and
medium enterprises (SMEs), as many financial institutions view the bioethanol
sector as high-risk, leading to reluctance in providing loans. Furthermore, the
volatility of bioethanol prices introduces uncertainty for investors, making it
challenging to project returns and justify the significant upfront capital
investment.
Compliance
with government regulations and quality standards can also increase operational
costs, necessitating further investment in monitoring and compliance systems.
Smaller producers often find it difficult to achieve economies of scale, which
limits their ability to distribute high capital costs across larger outputs and
negatively affects their competitiveness. To address these challenges, targeted
government policies, innovative financing solutions, and strategic partnerships
may be required to lower entry barriers and strengthen the bioethanol industry.
By finding methods to reduce capital costs, India can enhance its bioethanol
production capacity and further its renewable energy objectives.
Seasonality and Geographical
Variations
Seasonality
and geographical variations present substantial challenges for the bioethanol
market in India, affecting crop availability, production consistency, pricing
stability, and operational efficiency. The industry heavily relies on
agricultural crops like sugarcane and corn, which are subject to seasonal
fluctuations. This dependence can result in inconsistent raw material
availability, disrupting production schedules and capacity.
Different
crops have varying harvest timelines, complicating supply chain management and
leading to cycles of surplus and shortage. Additionally, the cultivation of
biofuel feedstocks tends to be concentrated in specific regions, such as Uttar
Pradesh and Maharashtra for sugarcane, which can create vulnerabilities in
regional supply chains.
Infrastructure
disparities across regions can hinder transportation and logistics efficiency,
making it difficult to move feedstocks and finished products to market.
Furthermore, unpredictable weather conditions, such as droughts or heavy
rainfall, can negatively impact crop yields, leading to fluctuations in
feedstock availability for bioethanol production.
These
seasonal and geographical factors can also contribute to price volatility in
raw materials. Surplus periods may depress prices, while shortages can cause
spikes, complicating financial forecasting and planning. The capacity to
process raw materials efficiently can differ by location, affecting overall
production capacity and responsiveness to market demands. Moreover, government
support for bioethanol can vary by region, influencing investment decisions and
the viability of operations. By addressing these challenges, India can
strengthen the resilience of its bioethanol sector and align it more
effectively with renewable energy objectives.
Key Market Trends
Ethanol Blending in Aviation
Fuels
Ethanol
blending in aviation fuels is an emerging trend within India's biofuels market.
The aviation sector faces increasing pressure to lower its carbon emissions,
and ethanol, as a renewable fuel, presents a viable solution for achieving
sustainability targets and meeting regulatory emission reduction requirements. The
government has established a strategy for integrating sustainable aviation fuel
into the Indian aviation industry, which includes blending 1% of aviation
turbine fuel with SAF by 2027 and increasing that to 2% for international
flights in 2028. The Indian government has actively supported the promotion
of biofuels, including ethanol, across various sectors, extending this
encouragement to aviation by fostering research and development for ethanol
blending. India's commitments under international agreements like the Paris
Agreement further align with the push for cleaner aviation fuels.
Collaboration
among airlines, fuel producers, and government agencies is increasing as they
work together to explore and implement ethanol blending in aviation fuels. For
instance, in May 2024, Dubai-based SAF One collaborated with Bengaluru-based
GPS Renewables to co-develop a plant capable of producing 20 to 30 million
liters of bioethanol annually using lignocellulosic waste feedstock.
Ongoing
research into blending ratios and the development of compatible engines are
crucial for successfully incorporating ethanol into aviation fuels.
Technological advancements are enabling more efficient utilization of ethanol
in this sector.
Consumer
and stakeholder interest in sustainable travel options is growing. Airlines
that adopt greener fuels, such as ethanol blends, can improve their brand image
and attract environmentally conscious passengers. As technology continues to
advance and government support remains strong, this trend could significantly
contribute to reducing the carbon footprint of air travel in India and beyond.
By adopting ethanol blending, the aviation industry can play a vital role in
fostering a sustainable future while reaping economic benefits from local fuel
production.
Segmental Insights
Feedstock Insights
Based
on Feedstock, the Sugar Based emerged as the dominating
segment in the Indian market for Bioethanol during the forecast period. India boasts a robust sugar industry
with extensive infrastructure for the cultivation, processing, and distribution
of sugarcane and molasses. This established framework facilitates the efficient
production of bioethanol. Sugarcane’s high sugar content allows for easy
conversion into ethanol through fermentation, resulting in superior ethanol
yields compared to starch or cellulose feedstocks, thereby enhancing its
economic viability.
The
Indian government has introduced various policies and incentives to promote
bioethanol production from sugarcane, including price guarantees and subsidies
for farmers. These measures encourage investment in the sugarcane bioethanol
sector. Additionally, by-products like molasses are often used for ethanol
production, maximizing resource utilization and contributing to waste
reduction, thus enhancing sustainability.
The
sugarcane industry also offers significant income opportunities for farmers,
especially in rural regions, fostering a strong interest in bioethanol
production. Furthermore, sugarcane thrives in India's climate, particularly in
states like Uttar Pradesh and Maharashtra, where growing conditions are
optimal, ensuring a reliable supply. These factors create a conducive
environment for the ongoing expansion of bioethanol production from sugarcane,
establishing it as a crucial element of India's renewable energy strategy.
Fuel Generation Insights
Based
on Fuel Generation, Second Generation emerged as the fastest growing segment in
the Indian market for Bioethanol in 2024. Second-generation bioethanol
leverages by-products and waste materials, which helps reduce environmental
waste and fosters a circular economy. This strategy minimizes landfill usage
and enhances resource efficiency. Producing bioethanol from non-food sources
generally results in lower greenhouse gas emissions compared to fossil fuels,
aligning with India’s commitments to environmental sustainability and climate
objectives. Unlike first-generation bioethanol, which relies on food crops,
second-generation bioethanol does not compete for arable land or resources
essential for food production, thereby addressing food security concerns in a
country where agricultural productivity is vital. The Indian government is
actively encouraging the use of agricultural residues and non-food feedstocks
through various initiatives, including subsidies and incentives aimed at
promoting research and investment in second-generation biofuels. These policies
increasingly emphasize achieving sustainable development goals, further
enhancing the appeal of second-generation bioethanol.
Technological
advancements, such as enzymatic hydrolysis and fermentation processes, are
making the production of second-generation bioethanol more efficient and
cost-effective. For example, in May 2024, Fermbox Bio, a synthetic biology
research and manufacturing company, launched EN3ZYME, an innovative enzyme
cocktail designed to improve the efficiency and cost-effectiveness of
converting pre-treated agricultural residues into fermentable cellulosic
sugars, which are essential for producing second-generation ethanol.
With
its sustainability advantages, compatibility with food security needs,
government backing, technological progress, and diverse feedstock availability,
second-generation bioethanol is well-positioned for substantial growth in the
coming years. As the market develops, it is expected to play a key role in
fulfilling India’s energy requirements while supporting environmental
sustainability.
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Regional Insights
Based
on Region, North India emerged as the dominant region in the Indian market for Bioethanol
in 2024. North India, especially Uttar Pradesh, is the leading producer of
sugarcane in India. Sugarcane is a key raw material for bioethanol production,
as both its juice and molasses can be fermented into ethanol. Additionally,
North India cultivates other crops like maize and wheat, which can also be used
for bioethanol, enhancing the diversity of available feedstock.
The
government provides financial support and incentives for bioethanol production,
particularly in states with substantial sugarcane farming. This promotes
investment from farmers and entrepreneurs in bioethanol facilities. For
example, the Uttar Pradesh government has initiated the State BioEnergy
Promotion Programme, designed to encourage bioenergy enterprises. This program
offers benefits such as capital subsidies, full reimbursement of state GST for
ten years, and exemptions from stamp duty on land purchases for establishing
these enterprises. Uttar Pradesh also launched its Bioenergy Policy 2022 to
enhance the bio-economy and decrease reliance on fossil fuels.
The
region boasts a strong network of sugar mills, many of which are capable of
producing bioethanol from molasses, a byproduct of sugar production. This
established infrastructure reduces the need for new investments and facilitates
a smoother transition to bioethanol production. Moreover, North India has a
well-developed transportation network that aids in the efficient movement of
raw materials like sugarcane to processing facilities and the distribution of
finished bioethanol products. As urbanization and industrialization accelerate
in North India, the demand for energy is rising. Bioethanol, as a cleaner fuel
alternative, is increasingly appealing to both consumers and businesses.
The
region is also home to numerous agricultural universities and research
institutions focused on biofuels and renewable energy, fostering research,
innovation, and the development of advanced bioethanol production technologies.
The regulatory environment in North India is generally favorable for biofuel
production, characterized by less bureaucratic complexity than in other
regions, which encourages investment and the establishment of new bioethanol
plants. As India intensifies its efforts toward renewable energy and carbon
footprint reduction, North India's importance in the bioethanol sector is
expected to grow.
Recent Development
- In
August 2024, Swacch Bio, a company specializing in lignocellulosic biofuels,
announced plans to establish a second-generation (2G) bioethanol plant in
Telangana with a capacity of 250 KLPD. This project involves an initial
investment of over USD 119.09 Million.
- In
July 2024, TruAlt Bioenergy secured a significant order exceeding USD 46.44 Million to
supply nearly 6 crore liters of first-generation (1G) Bioethanol to major Oil
Marketing Companies (OMCs) such as Hindustan Petroleum, Bharat Petroleum,
Indian Oil Corporation, and Mangalore Refineries and Ports. This supply is
scheduled from August to October 2024. Currently, TruAlt has an installed
capacity of 14 lakh liters per day for 1G Bioethanol and is working to expand
this to 20 lakh liters per day, incorporating dual feed integration for ethanol
production from maize and damaged grains.
- In
July 2024, AM Green announced plans to invest USD1 billion in the
second-generation biofuels sector, which includes establishing two bioethanol
plants. The company also intended to acquire a 50% stake in Assam Bio Refinery
Pvt. Ltd. from Finnish companies Fortum Oyj and Chempolis Oy.
- In
August 2023, Dr. GS Kocher, the principal microbiologist and head of the
microbiology department at Punjab Agricultural University, along with PhD
graduate Nadia Razdan, was granted a patent by the Indian Patent Office for a
process to produce bioethanol from industrial-grade wheat grains using
alpha-amylase. This innovative process addresses the issue of damaged wheat,
which represents a significant portion of post-harvest losses.
Key Market Players
- Balrampur Chini Mills Limited
- Praj Industries Limited
- India Glycols Limited
- Triveni Engineering & Industries
Ltd.
- Gulshan Polyols Limited
- Advanced Enzyme Technologies Limited
- Bajaj Hindusthan Sugar Ltd.
- Shree Renuka Sugars Ltd.
- DCM Shriram Industries Ltd.
- HPCL Biofuels Ltd.
|
By
Feedstock
|
By
Fuel Generation
|
By
Fuel Blend
|
By
Application
|
By Region
|
- Starch Based
- Sugar Based
- Cellulose Based
- Others
|
- First Generation
- Second Generation
- Third Generation
|
- E5
- E10
- E15 TO E70
- E75 TO E85
- Others
|
- Fuel & Fuel Additives
- Industrial Solvents
- Disinfectant
- Personal Care
- Beverages
- Others
|
- West India
- North India
- South India
- East India
|
Report Scope:
In this report, the India Bioethanol Market has
been segmented into the following categories, in addition to the industry
trends which have also been detailed below:
- India Bioethanol Market, By Feedstock:
o Starch Based
o Sugar Based
o Cellulose Based
o Others
- India Bioethanol Market, By Fuel Generation:
o First Generation
o Second Generation
o Third Generation
·
India Bioethanol
Market, By Fuel Blend:
o E5
o E10
o E15 TO E70
o E75 TO E85
o Others
·
India Bioethanol
Market, By Application:
o Fuel & Fuel Additives
o Industrial Solvents
o Disinfectant
o Personal Care
o Beverages
o Others
- India Bioethanol Market, By Region:
o West India
o North India
o South India
o East India
Competitive Landscape
Company Profiles: Detailed analysis of the major companies presents in the India Bioethanol
Market.
Available Customizations:
India Bioethanol Market report with the given
market data, Tech Sci Research offers customizations according to a company's
specific needs. The following customization options are available for the
report:
Company Information
- Detailed analysis and profiling of additional
market players (up to five).
India Bioethanol Market is an upcoming report to be
released soon. If you wish an early delivery of this report or want to confirm
the date of release, please contact us at [email protected]