The Centre is considering allowing ethanol exports as India's production capacity significantly outpaces domestic demand, according to the All India Distillers' Association (AIDA).
The industry body said it is in discussions with the government to ease restrictions on ethanol exports, adding that the government is receptive to the proposal and approvals could come soon. The move is aimed at creating overseas demand for India's surplus ethanol production, with neighbouring countries such as Nepal and Bangladesh, as well as Indonesia, emerging as potential export destinations.
According to AIDA, these countries have set ethanol blending targets of 10% but currently lack adequate distillation capacity and sufficient feedstock to meet their domestic requirements, creating an opportunity for Indian producers. India currently has an annual ethanol production capacity of around 2,000 crore litres. However, domestic demand has not kept pace with capacity additions.
The country's annual ethanol requirement, including both fuel blending and non-fuel applications, stands at around 1,450 crore litres, leaving nearly 700 crore litres of production capacity unutilised. The industry believes exports could help bridge this demand gap while improving capacity utilisation for domestic distilleries.
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At present, ethanol exports are subject to government restrictions as India has prioritised domestic supplies to support its ethanol blending programme aimed at reducing dependence on imported crude oil.
However, with production capacity now comfortably exceeding domestic demand, AIDA has urged the government to permit exports of surplus volumes. The association said discussions with the government are progressing positively and indicated that the Centre is keen to allow exports in the near future.
If approved, the policy could provide a new growth avenue for India's ethanol producers while helping neighbouring countries achieve their clean fuel blending targets and strengthening India's position as a regional supplier of biofuels.
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