From Bamboo To Fuel: Japan To Provide Rs 3,585 Crore To Boost India's Ethanol Drive

Japan is set to provide up to 60 billion yen (around Rs 3,584.5 crore) in public and private financing for a national project in India that will convert bamboo biomass into fuel, according to a Nikkei Asia report. The initiative forms part of Tokyo’s wider push towards cleaner energy and marks the largest-ever financing by Japanese institutions in northeastern India.

According to Nikkei Asia, the project has been identified by Prime Minister Narendra Modi as a flagship initiative under India-Japan collaboration. It is being spearheaded by state-run Power Finance Corporation.

Funding will come from the Japan Bank for International Cooperation, alongside private-sector lenders, including Sumitomo Mitsui Banking Corp. The loan will be extended through PFC to Assam Bio Ethanol Pvt., which will run the project.

ABEPL, the first bio refinery to produce fuel-grade ethanol from bamboo biomass in the country, is close to completing a refinery in Assam’s Golaghat district that will process locally grown bamboo into fuel. Once operational, the plant will produce 49,000 tonnes of bioethanol annually, which will be sold in the Indian market as a petrol additive. It will also generate 11,000 tonnes of acetic acid, used in adhesives and related products, and 19,000 tonnes of furfural, a chemical feedstock for synthetic resins. Any leftover biomass will be repurposed for electricity generation, according to Nikkei Asia.

The project is located in India’s northeast, a region that borders China and Myanmar and is seen as geopolitically significant. Despite its importance, the area has long lagged in development.

India, the world’s third-largest emitter of carbon dioxide, faces a need to reduce its reliance on fossil fuels, stated Nikkei Asia. The country needs to expand the use of domestically produced biofuels. According to reports, the bamboo bioethanol project supports the government’s E20 programme, which promotes blending petrol with 20% ethanol.

Launched by Modi in 2023, the E20 initiative is designed to curb fuel imports and lower emissions.

Beyond financing, Japan will provide technical expertise for the biofuel production as well, Nikkei Asia reported. Some Japanese-made distillation equipment has already been installed at the refinery, and discussions are underway to incorporate Japanese fermentation technology. Tokyo also intends to support industrial applications of bamboo to help raise incomes for local farmers.

The announcement comes as the prime minister begins a two-day visit to Japan. His discussions in Tokyo are expected to cover trade and investment, defence and security and science and technology. He will also meet Japanese political leaders and take part in a business leaders’ forum alongside senior leaders from both countries.