India’s ethanol industry faces nearly 7 bln litres of surplus capacity

Nearly 7 bln litres of ethanol production capacity in India currently has no guaranteed market. Total installed capacity has already reached around 20 bln litres per year, while another 4 bln litres could be added during the current year.

India’s E20 blending programme requires around 11 bln litres of ethanol annually, while another 3–3.5 bln litres are consumed by the alcohol, pharmaceutical and chemical industries. As capacity continues to outpace demand, ethanol plants are operating at around 60% utilisation.

Industry estimates suggest capacity utilisation could remain at 65–75% over the next three years. Maharashtra is expected to have one of the largest surpluses, at around 2.77 bln litres.

Producers are looking for new sales channels, including export markets and additional uses for ethanol. Potential options include supplying countries with fuel-blending programmes and using bio-isobutanol as a blending component in diesel.

A further increase in mandatory ethanol blending to E25 or E30 is not currently planned, making the search for additional demand for existing capacity a key challenge for the industry.

Tags: ethanol, India