Can Ethanol contribute to India’s financial freedom?

What does it mean to be truly free? A country as old, and culturally rich as ours, was bound in chains. She had to sacrifice her best to rid herself of that revolving slavery. Freedom for us came with a lot of pain. And yet, despite all that we’ve overcome, we are today patronised by nations who have enjoyed over 2 centuries of independence; nearly the same time span during which we were exploited. 

We realise that maybe the hubris stems from the fact that they are ‘wealthier’ nations? And the inward looking world we’re living in, means we have fewer friends. What should we do in these testing times? Perhaps we do what we did so well to unchain ourselves - we rediscover our dignity & to take a line from one of the greatest thinkers of modern India

“যদি তোর ডাক শুনে কেউ না আসে তবে একলা চলো রে।

Jodi tor daak shune keu na ashe, tobe ekla cholo re

If they answer not to your call, walk alone, walk alone. 

But what does Ethanol have to do with Rabindranath Thakur ji’s poem? It could in no small way reduce our dependence on others. It could contribute to our financial freedom.

What is ethanol, really? At its core, ethanol is a simple molecule: C₂H₅OH, a compound composed of carbon, hydrogen, and oxygen. Beyond its identity as the alcohol in beverages, ethanol is prized worldwide as a fuel. It burns cleanly, dissolves readily in water, and lends itself both to industry and energy. Its utility as a biofuel lies in its ability to blend with petrol, lowering greenhouse gas emissions and acting as a renewable alternative to fossil fuels.

The journey of ethanol in India begins in the fields of farmers. Predominantly, ethanol is produced from molasses—a byproduct of sugarcane processing. With India ranking as the world’s second-largest sugarcane producer, the raw material is abundant. States such as Uttar Pradesh, Maharashtra, and Karnataka dominate the country’s sugarcane belt, with millions dependent on this cash crop. More recently, the push towards ethanol has resulted in increased use of grains like maize and surplus rice for fuel production, making cultivation more lucrative and offering new hope for diversification in rainfed, resource-poor regions.

The production of ethanol is a relatively straightforward process: sugarcane is harvested and crushed to extract juice, which is then fermented with the help of yeast to produce ethanol, which is finally distilled and purified for use. A similar route is followed for grains. India’s ethanol production capacity has soared in recent years, reaching over 1,800 crore litres per annum in 2025. 

This brings us directly to the unique promise of ethanol blending. As of 2025, India has achieved an average of 20% ethanol blending in petrol, a significant milestone reached five years ahead of schedule. The implications are far-reaching. First and foremost, for a nation that imports over 80% of its crude oil, every litre of ethanol blended with petrol is a litre of imported fuel displaced. Over the past decade, this blending initiative has reduced crude oil imports by around 245 lakh metric tonnes, translating to foreign exchange savings of nearly ₹1.4 lakh crore. In concrete economic terms, that’s ₹43,000 crore saved each year—money retained within our borders, funding our farmers and our future.

Ethanol’s strategic potential also shines against the backdrop of electric mobility. While electric vehicles are part of India’s energy future, their batteries are largely imported—China dominates the global supply of lithium and other critical minerals. By contrast, ethanol is homegrown, using Indian crops, Indian land, and Indian labour. A robust biofuel sector gives India a hedge against supply shocks and foreign dominance in the energy transition.

The real test, however, is how much of the Rs. 43,000 crore is trickling down to the people in the fields. There is growing evidence that ethanol’s arrival has begun to transform the economic landscape of rural India, particularly in the sugarcane-dominated states. But much needs to be done. 

hile mills and distilleries—often the first beneficiaries of new ethanol policies—have improved their financial health, the impact can be uneven for small and marginal farmers. Payment delays, water-intensive sugarcane cultivation, and local market monopolies can still leave farmers vulnerable. India’s sugarcane belt has been the site of widespread distress, including tragic spikes in farmer suicides, particularly in Maharashtra and Karnataka. 

I can tell from my personal experience travelling to sugarcane factories in north Karnataka, that farmers are helpless against powerful lobbies - be it their own farmer collectives, owners of sugar factories or those in the inner circles of powerful legislators. I have seen farmers, with their heads bowed down, hands folded, pleading for payments that have been due for over 6 months, being mercilessly berated and driven away.

Ethanol alone cannot solve these complex socio-economic problems, but it is making a meaningful contribution by improving market stability and rural liquidity.

Concerns also arise about ethanol’s impact on vehicle performance. I’m no automobile expert, but from what I’ve read, critics have cited issues such as phase separation—a phenomenon where ethanol attracts water, risking engine performance if moisture is present. However, global evidence, particularly from Brazil, tells a different story. Brazil, a world pioneer in ethanol automotive fuels, runs most of its passenger vehicles on blends as high as E27 (27% ethanol) and has developed flex-fuel engines specifically for alcohol-based fuels. The result has been lower emissions, robust engine performance, and vast savings on oil imports. If Brazil can, so can we.

If financial freedom is the ability of a society to chart its own course, unencumbered by avoidable dependencies, then ethanol—properly harnessed—brings that freedom tantalisingly close.