The India ethanol market size is estimated to be valued at USD 3.28 Billion in 2025. It is forecasted to reach USD 9.31 Billion by 2032, exhibiting a CAGR of 16.1% during the forecast period (2025–2032).
The India ethanol market growth is mainly fueled by a strong push towards ethanol blending with petrol. Increasing emphasis on decreasing crude oil imports, along with the rising demand for biofuels, is driving India’s clean energy transition.
Additionally, favorable policies like the Ethanol Blended Petrol (EBP) Program and incentives for sugar mills and grain-based distilleries are expected to bolster the market growth.
However, feedstock constraints and challenges surrounding distribution and storage infrastructure will limit the market’s full potential.
Key Market Insights
The India ethanol market is anticipated to be shaped by supportive policy frameworks, expanding biofuel adoption, and accelerating investments in ethanol production infrastructure, and rising investments in ethanol production infrastructure across the sugar and grain industries.
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India Ethanol Market Report Coverage
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Report Coverage |
Details |
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Market Revenue in 2025 |
USD 3.28 Billion |
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Estimated Value by 2032 |
USD 9.31 Billion |
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Growth Rate |
16.1% |
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Historical Data |
2020–2024 |
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Forecast Period |
2025–2032 |
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Forecast Units |
Value (USD billion) |
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Report Coverage |
Revenue Forecast, Competitive Landscape, Growth Factors, and Trends |
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Segments Covered |
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Growth Drivers |
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Opportunities |
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Trends |
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Restraints & Challenges |
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Market Dynamics
India's ethanol sector is experiencing a major shift with ambitious biofuel policies, changing agricultural priorities, and consumer demands. The government's push to increase ethanol production has led farmers to shift from oilseed crops to grain-based feedstocks like corn and rice, using record crop yields to meet the 20% gasoline blending target (E20). However, this transition has led to unintended consequences: the loss of domestic oilseed production, a reliance on edible oil imports. It has also resulted in an oversupply of Distillers Dried Grains with Solubles (DDGS), a fermented ethanol byproduct, in the livestock feed industry.
The Grain Ethanol Manufacturer's Association (GEMA) has been a catalyst in accelerating the adoption of higher ethanol blends and pushing for the promotion of flex-fuel vehicles (FFVs) at a national scale. These initiatives aim to address the surplus ethanol supply and enhance overall market stability. According to GEMA, flex-fuel engines capable of running on a combination of ethanol and petrol blends can significantly strengthen India’s biofuel ecosystem. This approach aligns India more closely with Brazil’s advanced E27–E55 model and supports the nation’s journey toward its net-zero emissions target.
Market Opportunity: Ethanol-to-Chemicals and Green Hydrogen Pathways
Ethanol can act as a flexible feedstock for the production of bio-based chemicals (like ethylene, acetic acid, and ethyl acetate) as well as green hydrogen via catalytic reforming. This establishes a circular, low-carbon value chain because renewable ethanol is transformed into industrial feedstocks and clean fuels.
Recent developments in India bolster this pathway — in 2023, researchers from IIT Guwahati demonstrated a catalytic reforming process to convert ethanol into hydrogen and acetic acid under aqueous conditions, which indicates its functionality for energy and chemical production. In August 2024, GAIL (India) Ltd signed an MoU with Petron Scientech Inc. (U.S) to establish a 500 KTPA bio-ethylene plant that would utilize bio-ethanol as feedstock, representing key progress towards the manufacture of chemical products from ethanol in India.
Market Challenge: Feedstock Diversion and Agricultural Imbalance
The rapid shift of farmers from oilseed and food grain cultivation toward ethanol feedstocks such as corn, sugarcane, and rice is creating an agricultural imbalance. This diversion strains food security and contributes to higher edible oil imports and rising food prices. Sustaining ethanol growth without affecting staple crop supply has become a key policy challenge.
According to a 2024 article from the Food Corporation of India (FCI), cereal grains have overtaken sugar-cane as the primary feedstock for ethanol production in India. In the supply year 2024/25, about 5.2 million metric tons of rice were diverted for ethanol production.
Analyst View
Recent Development
Competitive Landscape
India Ethanol Market Segmentation
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