Pune: As ethanol-blended petrol (EBP) comes under fresh scrutiny over concerns about vehicle performance and fuel efficiency, Maharashtra’s sugar industry is mounting a strong defence of the biofuel programme, arguing that ethanol has become the financial backbone of the state’s sugar sector.
Event Context
Maharashtra’s ethanol story began well before blending became a national priority. Pune-based Praj Industries was among the first companies to develop indigenous ethanol production technology and establish plants in the state, laying the foundation for India’s biofuel industry.
The state has nearly 210 sugar mills, including 106 cooperative mills, of which around 150 produce ethanol. Installed production capacity is close to 400 crore litres, compared with over 2,000 crore litres nationally.
The numbers reflect that shift. Ethanol production in Maharashtra increased from 81.37 crore litres in the 2023-24 Ethanol Supply Year (November-October) to 104.83 crore litres in 2024-25. Around 64 crore litres have already been produced in the ongoing supply year.
Union Road Transport and Highways Minister Nitin Gadkari has repeatedly argued that biofuels are critical to the future of both farmers and the sugar industry.
Player Focus
For Maharashtra’s sugar industry, ethanol is no longer a by-product but a core business—one that has strengthened mill finances, improved farmer payments and made the state a key player in India’s energy transition.
Team Analysis
“Last year alone, India’s ethanol blending programme helped save nearly ₹45,000 crore in foreign exchange by reducing crude oil imports. Besides benefiting the environment, it has provided an assured market for crops like sugarcane, maize and rice,” said NFCSF president Harshwardhan Patil.
Patil dismissed criticism of E20 fuel.
“There is a lobby that wants India to continue depending on imported crude. Ethanol blending is beneficial for the country, farmers and the environment,” he said.
Former Maharashtra minister Rajesh Tope, who heads the Samarth Cooperative Sugar Factory in Jalna, rejected claims that E20 damages vehicle engines.
“There is misinformation being spread against the ethanol blending programme. Vehicles capable of running on ethanol blends are already available. The important thing is to ensure that the ethanol supplied is of the prescribed quality,” Tope said.
Maharashtra State Cooperative Sugar Factories Federation vice-chairman Pratap Ohol said ethanol revenue helps mills pay Fair and Remunerative Price (FRP) dues to farmers and salaries on time.
“Nearly 50,000 people, including cane farmers, factory workers, transporters and vendors—depend on every sugar mill. Revenue from ethanol improves the financial health of mills, enabling timely payment of Fair and Remunerative Price (FRP) to farmers and salaries to workers,” Ohol said.
The industry, however, wants procurement prices revised. NFCSF managing director Prakash Naiknavare said prices for sugar-based ethanol have remained unchanged for four years even though the FRP for sugarcane has risen by nearly 20%.
“We have sought an increase in procurement prices for B-heavy molasses-based ethanol and juice-based ethanol to reflect the higher cost of production,” Naiknavare said.
The industry has also urged the Centre to increase the share of sugar-based ethanol in procurement, saying Maharashtra has enough capacity to meet higher demand.
Match Outlook
“It will be tough for farmers to survive only by cultivating pulses or grains. The sugar industry could survive because of ethanol,” he said at an industry event last year.
source
Once a by-product of sugar production, ethanol is now a major revenue source for sugar mills, helping them cushion volatile sugar prices, pay farmers on time and reduce India’s dependence on imported crude oil. Industry leaders say many factories, particularly in western Maharashtra, would have struggled to survive without it.
The sector expanded rapidly after the Centre accelerated the Ethanol Blended Petrol programme. According to the state sugar commissionerate, Maharashtra’s ethanol production capacity rose from 26 lakh litres in 2021-22 to 244 crore litres in 2022-23 following heavy investment by cooperative and private sugar mills.
According to the National Federation of Cooperative Sugar Factories Ltd (NFCSF), Maharashtra’s mills have invested more than ₹35,000 crore in distilleries and ethanol infrastructure over the past four to five years. A modern ethanol plant costs between ₹150 crore and ₹500 crore, depending on capacity.
State Sugar commissioner Sanjay Kolte said ethanol has strengthened the financial viability of sugar factories.
“The capacity of sugar mills to produce ethanol is steadily increasing. Ethanol production has significantly improved the financial viability of sugar factories,” Kolte told HT.
Gadkari said India was also preparing to produce isobutanol as a diesel substitute and sustainable aviation fuel from biogas.
Highlighting the industry’s competitiveness, he said sugar costs about ₹27 per kg to produce in Brazil compared with ₹32-33 per kg in Maharashtra, while Brazil exports sugar at around ₹30 per kg. According to Gadkari, nearly 90% of sugar mills in western Maharashtra would have faced liquidation without the ethanol programme.
“So, farmers will have to ensure that they become producers not only of food but also of fuel, electricity, aviation fuel, bitumen and hydrogen. That will make villages rich,” he said.
Industry leaders say ethanol has reshaped the economics of sugar production.
