Ethanol industry faces surplus as demand stalls, exports uncompetitive: GEMA President

New Delhi [India], December 26 : Exports are unlikely to provide a solution for surplus ethanol in India, according to CK Jain, President of the Grain Ethanol Manufacturers Association (GEMA), who said domestic consumption has stagnated despite a sharp rise in production capacity.

Jain said ethanol consumption has effectively plateaued at around 1,200 crore litres, even though the industry is capable of supplying significantly more.

"Today we are capable of supplying 1,500 crore litres, but consumption has stopped," he said.

Though the industry is grappling with excess production, Jain ruled out exports as a solution for absorbing surplus ethanol.

"How can we export when grain prices in India are among the highest in the world?" he asked. "We are just converters. Seventy to seventy-two per cent of the ethanol price goes to farmers."

He clarified that while exports of second-generation (2G) ethanol are permitted, production remains negligible.

"They have given permission to export 2G ethanol, but it is not produced," he said, adding that grain-based (1G) ethanol cannot be price-competitive globally.

Jain recalled that the industry expanded rapidly after strong policy signals from the government during 2020-22.

"The government kept saying ethanol, ethanol, ethanol. They said we will not stop at 20 per cent; we will go beyond that," he said.

On the back of those assurances, producers invested heavily and significantly expanded capacity across the country.

Jain said there is a mismatch between policy projections and actual procurement of ethanol.

"If you read the NITI Aayog biofuel policy, they said consumption would be at least 1,500 crore litres by 2025," he said. "Against that, capacity offered was about 1,770 crore litres, but the allocation was only around 1,050 crore litres."

On food security concerns, Jain said fears around diversion of grains to ethanol are outdated.

He said diversion of grains for ethanol is limited.

"It is not more than 15-20 per cent of the total grain basket," Jain said, stressing that staples such as wheat and rice procured by FCI remain protected.

Ethanol feedstock, he said, includes maize and damaged food grains.

"Maize is hardly a human food. One or two per cent goes for human consumption," he said.

Jain emphasised that ethanol has transformed maize into an industrial crop for the first time. "Earlier, maize was only a feed crop. Now it has become an industrial crop," he said, adding that this has direct implications for farmer incomes.

He reiterated that grain-based ethanol played a critical role in achieving E20 blending but cautioned that without clarity on future blending targets and higher domestic absorption, the industry faces challenges ahead.

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