The India ethanol market size was valued at USD 3.58 Billion in 2025. The industry is expected to grow at a CAGR of 14.60% during the forecast period of 2026-2035 to reach a valuation of USD 13.99 Billion by 2035.
The India ethanol market is undergoing rapid expansion, driven by strong policy support, rising demand for biofuels, and the country’s push for energy independence. Ethanol, a renewable fuel derived primarily from sugarcane molasses and grain-based feedstocks, plays a vital role in India’s strategy to reduce crude oil imports and curb carbon emissions.
India’s drive for energy self-reliance is accelerating the Ethanol Blending Program (EBP), boosting India ethanol market growth. In April 2025, India reportedly targeted 30% ethanol blending with petrol by 2030 for reducing dependence on imported oil whilst addressing environmental concerns. Such goals are incentivising sugar mills and grain-based distilleries to generate more ethanol as well as urge oil marketing companies in securing the long-term supply contracts, shaping the fuel-ethanol ecosystem rapidly.
State-owned oil marketing companies, such as IndianOil, HPCL, and BPCL are investing heavily in ethanol projects. In September 2023, Oil India was planning to invest around ₹8,000 crore in the 2G ethanol space amid India’s push for biofuels. These companies are also investing in ethanol storage, distribution infrastructure, and supply contracts with distilleries. India is actively encouraging the development and use of Flex-Fuel Vehicles (FFVs), which can run on blends ranging from E20 to E85. Auto manufacturers like Maruti Suzuki, Toyota, and TVS are already developing FFV models for Indian consumers.
Technological advancements in distillation, fermentation, and waste processing for making ethanol production more efficient and cost-effective is further favouring the India ethanol industry. AI and IoT are being used for real-time monitoring in distilleries. Companies are adopting zero liquid discharge (ZLD) systems to reduce environmental impact. New enzyme technologies are increasing yields from grains and lignocellulosic biomass. In May 2024, Indian biotech firm Fermbox Bio introduced its new cellulosic enzyme cocktail for transforming agricultural waste into 2G ethanol. These innovations are making ethanol projects more attractive to investors and reduce operational risks.
Base Year
Historical Period
Forecast Period
Compound Annual Growth Rate
14.6%
Value in USD Billion
2026-2035
*this image is indicative*
| India Ethanol Market Report Summary |
Description |
Value |
|
Base Year |
USD Billion |
2025 |
|
Historical Period |
USD Billion |
2019-2025 |
|
Forecast Period |
USD Billion |
2026-2035 |
|
Market Size 2025 |
USD Billion |
3.58 |
|
Market Size 2035 |
USD Billion |
13.99 |
|
CAGR 2019-2025 |
Percentage |
XX% |
|
CAGR 2026-2035 |
Percentage |
14.60% |
|
CAGR 2026-2035- Market by Region |
South India |
16.1% |
|
CAGR 2026-2035 - Market by Region |
East India |
15.5% |
|
CAGR 2026-2035 - Market by Type |
Bio Ethanol |
15.4% |
|
CAGR 2026-2035 - Market by Purity |
Denatured |
15.8% |
| 2025 Market Share by Region | North India |
26.4% |
The surging government initiatives to promote biofuel investment by reducing financial risk and offering capital support is fostering the India ethanol market development. In January 2025, the Road Transport and Highways Ministry of India was in discussion with oil companies for making ethanol rates reasonable. Clear procurement price guidelines and annual targets offer predictability to producers and investors. Such cohesive policy alignment fuels confidence among stakeholders, from farmers to fuel retailers, creating a robust foundation for long-term growth in India’s ethanol economy.
Traditionally reliant on sugarcane, India’s ethanol production is increasingly diversifying into grains like maize and surplus rice. This diversification aligns with food security goals and ensures continuous ethanol supply despite sugarcane price fluctuations or drought. The government now permits ethanol production from surplus FCI rice, damaged food grains, and maize. According to industry reports, grain-based ethanol contributed over 40% of total production in 2024. This not only supports the rural economy but also strengthens India’s ethanol security by mitigating seasonal dependence and expanding production geographies.
The growing urban population and expanding vehicle fleet combined with the subsequent rise in fuel demand is expected to boost the India ethanol market. According to industry reports, more than 40% of India's population will reside in urban areas by 2030. Ethanol blending in petrol helps offset rising fuel imports and mitigates price shocks. Blending ethanol into petrol reduces net oil imports, saving valuable foreign exchange. Additionally, ethanol-blended fuels burn cleaner, reducing particulate emissions and enhancing urban air quality.
The rising rate of production driven by new distillery projects, technology upgrades, and financial support mechanisms is significantly contributing to the India ethanol market share. According to industry reports, India produced about 3.57 billion litres of ethanol as of June 2024. Sugar mills are also converting molasses into ethanol more efficiently, and new grain-based distilleries are being set up across several states. This capacity expansion is vital to achieving blending and sustaining long-term energy security while creating rural jobs and industrial growth.
The India ethanol market value will grow with the rising infrastructure growth. Dedicated ethanol pipelines, blending terminals, and ethanol-compatible dispensing units are largely developed in the country. In February 2023, the Indian Government launched the roll-out of petroleum blended with 20% ethanol from 84 pumps across 11 states and union territories. IndianOil and HPCL are also upgrading their fuel stations and logistics chains for ethanol handling. This ensures that ethanol-blended petrol is accessible even in tier-2 and rural areas.
The EMR’s report titled “India Ethanol Market Report and Forecast 2026-2035” offers a detailed analysis of the market based on the following segments:
Breakup by Type
Key Insight: Bio ethanol dominates India ethanol market, driven primarily by sugarcane molasses and grain-based production. According to industry reports, India produced over 6 billion liters of bio ethanol in 2024, with a significant share from sugar-based feedstocks. The government’s policy allows production from surplus rice and maize to ensure consistent supply. Companies, such as Balrampur Chini Mills and Godavari Biorefineries are expanding bio ethanol capacity, while IndianOil and HPCL have signed supply contracts with distilleries, strengthening the integration of bio ethanol into India's fuel economy.
Breakup by Raw Material
Key Insight: The sugar and molasses segment is the backbone of India ethanol market. Traditionally, ethanol in India is derived from molasses, a by-product of sugarcane processing. As per industry reports, India produced around 3.57 billion litres of ethanol in 2024, out of which 1.75 billion litres was derived sugar-based feedstock. The government’s fixed procurement prices for B-heavy molasses and cane juice ethanol incentivise sugar mills to divert more towards ethanol rather than excess sugar production, adding to the segment growth.
Breakup by Purity
Key Insight: Denatured ethanol accounts for a large India ethanol market share primarily due to its extensive use in fuel additives, industrial solvents, and disinfectants. The demand for denatured ethanol has surged with the government's push to achieve ethanol blending in petrol. This has led to increased production capacities among sugar mills and distilleries. As per industry reports, Uttar Pradesh is likely to boast 205.3 crore litres in annual installed capacity from molasses-based projects and 3.4 crore litres from grain-based projects.
Breakup by Application
Key Insight: Fuel & fuel additives is the largest application segment for the ethanol market in India, driven by the government support and rising focus on the reduction of emissions. In April 2022, the Sugarcane Industry Union (UNICA) signed an MoU with the Indian Automobile Manufacturers Association (SIAM) for building an integrated agenda for limiting emissions across the vehicle transport matrix in India. Major oil marketing companies, such as Indian Oil Corporation have also significantly ramped up ethanol procurement to meet blending targets.
Breakup by Region
Key Insight: North India will likely lead the India ethanol market landscape, driven by the rising rate of production. According to industry reports, as of April 2025, the ethanol production capacity of Uttar Pradesh surged to 2 billion liters per year with a target of 2.5 billion liters annually in the future. The state's extensive sugarcane cultivation provides a steady feedstock supply for ethanol production. Recent policy measures, including the lifting of restrictions on rice sales for ethanol production, have further stimulated the sector.
|
CAGR 2026-2035 - Market by |
Region |
| South India |
16.1% |
| East India |
15.5% |
| West India |
XX% |
| North India |
XX% |
Industrial Sector to Boost Indian Synthetic Ethanol Demand
The synthetic segment in the India ethanol industry is primarily driven by the growth of the industrial and pharmaceutical sectors. According to industry reports, India's industrial production increased to 3.8% in December 2023. Synthetic ethanol is produced from petrochemical feedstocks like ethylene, making it costlier and less eco-friendly than bio ethanol. Despite this, its usage remains essential for products requiring high-purity ethanol, such as cosmetics, medical-grade sanitizers, and laboratory reagents.
Algal Biomass Emerging as a Promising Alternative Feedstock for Ethanol Production
The algal biomass segment in the India ethanol market is an emerging area with significant future potential. Algae, particularly microalgae, can produce ethanol through fermentation of its carbohydrate content, and offers far higher yield per acre compared to traditional crops. India’s Department of Biotechnology and premier institutions, such as IITs and TERI are investing in R&D for algal biofuels under bioenergy programs. Algae’s fast growth rate, non-dependence on arable land, and carbon capture abilities make it a promising long-term feedstock for sustainable ethanol.
Rice, especially surplus and damaged stock from the Food Corporation of India (FCI), has become a strategic ethanol feedstock. According to industry reports, in 2024, 2.8 million tonnes of FCI rice were allocated for ethanol production. Grain-based distilleries in states, such as Bihar, Chhattisgarh, and Odisha rely heavily on rice. While it raises food security debates, using non-edible or excess rice stocks for fuel helps manage procurement surpluses and supports rural industry development.
Undenatured Ethanol to Witness Higher Adoption in India
Undenatured ethanol, primarily utilised in beverages and pharmaceuticals, constitutes a significant portion of the India ethanol market driven by increased consumption of alcoholic beverages and expanding pharmaceutical applications. The government's focus on enhancing domestic production for fuel blending has led to policy shifts, such as permitting ethanol production from sugarcane juice and syrup starting November 2024. These measures aim to balance fuel-grade ethanol production with the needs of the undenatured segment, ensuring a stable supply for both sectors.
Beverages and Industrial Solvents Driving Demand in the Market
The growth of the beverages segment in the India ethanol market is fueled by increasing disposable incomes, urbanisation, and changing social norms. According to industry reports, the number of Indian households with incomes surpassing USD 10,000 surged twentyfold in 25 years. Ethanol is a key ingredient in the production of spirits, wines, and beers. In spirits, ethanol is produced through the fermentation of sugars and then concentrated via distillation to achieve high alcohol content.
Meanwhile, ethanol serves as a vital industrial solvent in sectors, such as pharmaceuticals, cosmetics, and personal care. As per industry reports, the output of bioethanol across the pharmaceuticals market is expected to rise by 4.32% till 2027. The surge in demand for ethanol in hand sanitisers and disinfectants has led to significant investments in ethanol production capacity, with numerous new distilleries coming online to meet the growing requirements of the industrial solvents sector.
Improved Production Trends to Influence West India Ethanol Market
West India stands out as a leader in ethanol production in India. According to industry reports, Maharashtra aims to supply 121 crore liters of ethanol during 2024-25 through sugar mills to oil companies. The state's robust infrastructure, including numerous sugar mills, facilitates efficient ethanol manufacturing. Companies like Shree Renuka Sugars Ltd. have expanded their distillery capacities, further bolstering production capabilities. The government's supportive policies, such as subsidies and incentives for bioethanol facilities, have also contributed to the market growth.
South India is experiencing significant growth in the bioethanol sector, driven by states like Karnataka, Tamil Nadu, and Andhra Pradesh. These regions benefit from diverse feedstock sources, such as sugarcane, maize, and cassava, enhancing bioethanol production capacity. Karnataka, in particular, has been proactive in implementing biofuel initiatives, attracting both domestic and international investments. The state's Bio-Energy Development Board has also collaborated with German universities to promote sustainable biofuel production.
Leading players in the India ethanol market are adopting multiple strategic approaches to align with national goals and tap into rising demand. A key strategy involves capacity expansion, where companies, such as Balrampur Chini Mills and Shree Renuka Sugars have significantly ramped up ethanol production by enhancing distillery infrastructure and integrating dual-feedstock processing. Diversification of feedstock is another major focus, especially after the government approved the use of sugarcane juice, damaged food grains, and maize to boost output. Vertical integration is also being implemented, particularly among sugar companies that are adding ethanol production and power co-generation facilities to maximize value from agricultural by-products. Players, such as Triveni Engineering and Dwarikesh Sugar Industries are embracing technology upgrades and automation to improve process efficiency and ethanol recovery rates. Additionally, companies are entering into long-term supply agreements with Oil Marketing Companies to ensure consistent demand and pricing. Government incentives and soft loans have been leveraged effectively to fund new projects. Environmental sustainability also plays a role, with firms promoting biofuel adoption and zero-waste operations.
Balrampur Chini Mills Limited is headquartered in Kolkata, West Bengal. The company is a leading sugar manufacturer in India, offering sugar, ethanol, co-generation power, bagasse, and organic manure. It plays a key role in supporting India’s ethanol blending initiatives through integrated operations.
Established in 1932 and based in Noida, India, Triveni Engineering & Industries Limited operates across sugar manufacturing, ethanol production, co-generation, and water treatment. The company is recognized for its diversified industrial offerings and growing ethanol capacity.
Dwarikesh Sugar Industries Ltd., founded in 1995 and headquartered in Mumbai, India is engaged in the production of sugar, ethanol, and industrial alcohol. The company is known for efficient operations and eco-conscious production techniques and operates power co-generation units and focuses on sustainable energy practices.
Founded in 1998 and headquartered in Belagavi, Karnataka, Shree Renuka Sugars Ltd. is a major player in sugar refining and ethanol production. The firm deals in agricultural inputs and is known for its large-scale distillery operations and contributes significantly to ethanol blending programs in India and abroad.
*Please note that this is only a partial list; the complete list of key players is available in the full report. Additionally, the list of key players can be customized to better suit your needs.*
Other key players in the India ethanol market report are Dhampur Sugar Mills Ltd, Dalmia Bharat Sugar and Industries Limited, and others.
Discover comprehensive insights with the Expert Market Research report on India ethanol market trends 2026. Get accurate forecasts, detailed segment analysis, and expert commentary on industry growth drivers and challenges. Whether you're a fuel manufacturer, beverage producer, or investor, this report equips you with vital market knowledge. Download your free sample now to stay ahead in the competitive India ethanol industry landscape.
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*While we strive to always give you current and accurate information, the numbers depicted on the website are indicative and may differ from the actual numbers in the main report. At Expert Market Research, we aim to bring you the latest insights and trends in the market. Using our analyses and forecasts, stakeholders can understand the market dynamics, navigate challenges, and capitalize on opportunities to make data-driven strategic decisions.*
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In 2025, the market reached an approximate value of USD 3.58 Billion.
The market is projected to grow at a CAGR of 14.60% between 2026 and 2035.
The key players in the market report include Balrampur Chini Mills Limited, Triveni Engineering & Industries Limited, Dwarikesh Sugar Industries Ltd., Shree Renuka Sugars Ltd., Dhampur Sugar Mills Ltd, Dalmia Bharat Sugar and Industries Limited, and others.
The key strategies boosting the market include the growing government measures, rising rate of production, and rising technology innovations.
Bio ethanol dominates market and is expected to register a CAGR of 15.4% during the forecast period.
Explore our key highlights of the report and gain a concise overview of key findings, trends, and actionable insights that will empower your strategic decisions.
| REPORT FEATURES | DETAILS |
| Base Year | 2025 |
| Historical Period | 2019-2025 |
| Forecast Period | 2026-2035 |
| Scope of the Report |
Historical and Forecast Trends, Industry Drivers and Constraints, Historical and Forecast Market Analysis by Segment:
|
| Breakup by Type |
|
| Breakup by Raw Material |
|
| Breakup by Purity |
|
| Breakup by Application |
|
| Breakup by Region |
|
| Market Dynamics |
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| Competitive Landscape |
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| Companies Covered |
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