These Stocks to Benefit From Ethanol Blending Programme: Shree Renuka, EID Parry and More

India has been making strides in its efforts to reduce dependence on fossil fuels and increase the adoption of renewable energy sources. A significant part of this effort is the National Policy on Biofuels, which aims to promote the use of biofuels like ethanol in petrol. The policy has undergone several changes, the most notable being the amendment in 2022, which advanced the target for ethanol blending from 2030 to the Ethanol Supply Year (ESY) 2025-26.

Ethanol Blending Milestones: Surpassing Expectations

The National Policy on Biofuels – 2018, revised in 2022, brought forward the ambitious target of 20% ethanol blending in petrol. Originally set for 2030, the new target aims to achieve this blend by 2025-26. This accelerated timeline is a reflection of the government’s commitment to enhancing energy security, promoting cleaner fuel options, and supporting farmers through the demand for feedstocks for ethanol production.

Public Sector Oil Marketing Companies (OMCs) have already exceeded expectations by reaching the 10% ethanol blending target in June 2022, a full five months ahead of the target during the Ethanol Supply Year (ESY) 2021-22. Since then, ethanol blending has continued to rise, reaching 12.06% in ESY 2022-23, 14.60% in ESY 2023-24, and an impressive 17.98% in ESY 2024-25, up to February 2025. However, there has been no decision yet on increasing blending beyond the 20% mark.

Stocks to Benefit from Rising Ethanol Blending

Note: The above-mentioned Ethanol Stocks have been selected and sorted based on 5Y CAGR as of March 21, 2025.

Diverse Feedstocks for Ethanol Production

The National Policy on Biofuels also promotes the use of various feedstocks for ethanol production, which is crucial for reducing dependency on food grains that might otherwise be used for human consumption. These feedstocks include surplus food grains, corn, cassava, spoiled potatoes, broken rice, and even agricultural residues like rice straw, corn cobs, and bagasse.

The policy allows for a flexible approach where the amount of feedstock used for ethanol production can vary each year based on availability, cost, and market demand. The government works in close consultation with stakeholders to ensure that the diversion of materials like sugarcane juice, maize, and other food grains does not disrupt the food supply chain.

Government Measures to Support Ethanol Production

Since 2014, the Indian government has introduced a range of measures to support farmers and ethanol producers in scaling up production under the Ethanol Blending Programme (EBP). These measures include:

• Expanding feedstock options for ethanol production.
• Introducing a regulated price mechanism for ethanol procurement under the EBP.
• Reducing the Goods and Services Tax (GST) rate on ethanol for the EBP to 5%.
• Amending the Industries (Development and Regulation) Act to facilitate the movement of ethanol across state borders.
• Simplifying the ethanol procurement process for Public Sector OMCs.
• Advancing the ethanol blending target to 2025-26, from 2030.

In addition, the government introduced Ethanol Interest Subvention Schemes (EISS) between 2018-2022 to incentivize ethanol production from both molasses and grains, aiming to establish ethanol plants. Long-term offtake Agreements (LTOAs) were also signed between OMCs and Dedicated Ethanol Plants (DEPs), ensuring a stable supply of ethanol for blending.

What’s Next for Ethanol Blending in India?

India’s journey towards achieving a 20% ethanol blend in petrol by 2025-26 is an ambitious but achievable goal. The continued rise in ethanol blending, coupled with the government’s proactive policies, has set the stage for a cleaner, greener, and more energy-secure future.

As India moves forward, the focus will likely shift toward improving the efficiency of ethanol use, expanding feedstock options, and ensuring that the infrastructure needed for ethanol production and blending is scalable. Moreover, further innovations in vehicle technology and biofuel production processes will be crucial in minimizing the environmental and economic impact of ethanol blending.

Conclusion

The National Policy on Biofuels and the ongoing push for increased ethanol blending are vital steps toward transforming India’s energy landscape. The next 5 years will be critical in determining how successfully these initiatives can be implemented, benefiting both the economy and the environment.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.