India’s push on ethanol blending has gained strong momentum in recent years. The mandate to blend higher proportions of ethanol into petrol is part of national policy to reduce fossil fuel imports, cut greenhouse gas emissions, and support the agricultural economy. But success depends heavily on feedstocks — what raw materials are used to produce ethanol — and whether they can scale sustainably. Here’s a look at what the data tell us about India’s Ethanol Journey and why the shift to 2G feedstocks matters.
Feedstock-wise Procurement: Current Status
Data for the Ethanol Supply Year (ESY) 2024-25 show how much ethanol has actually been procured by Oil Marketing Companies (OMCs), and from which raw materials.
According to the latest figures:
- Total contracted quantity: 1,131.70 crore litres.
- Received quantity: 904.84 crore litres. Of this, grains (like maize, rice) contributed 598.14 crore litres. Sugar-based feedstocks (sugarcane juice, molasses) contributed about 306.70 crore litres.
Here is a clearer breakdown (units in crore litres):
These numbers show two important patterns:
- Grain-based feedstocks dominate the procurement in the current year.
- There is a gap between contracted quantity and actual receipts (~20 %) which shows execution and logistics challenges.
For ESY 2025-26 (Cycle 1) the picture is already shifting. The OMCs asked for ~1,050 crore litres of ethanol supply and received offers of around 1,776 crore litres from manufacturers. From the allocation of ~1,048 crore litres, maize alone holds ~45.68% (~478.9 crore litres). Followed by surplus rice at ~22.25% (~233.3 crore litres), sugarcane juice ~15.82% (~165.9 crore litres), BHM ~10.54% (~110.5 crore litres), damaged food grains ~4.54% (~47.6 crore litres), and CHM ~1.16% (~12.2 crore litres)
This shows how the feedstock mix is evolving, with maize and other grains taking increasingly large shares.
Why Feedstock Matters for Blending Targets
India’s Ethanol Journey has set ambitious blending targets. The country has recently achieved ~19.17% ethanol blending (as of September 2025) nationally. But to move toward a 25-30% blending target (or higher) will require major increases in ethanol production — and thus feedstock supply capacity must scale.
Key challenges tied to feedstock:
- Availability & security of supply: Some feedstocks are seasonal, regional, or face competition (food vs fuel).
- Sustainability concerns: Using food crops or water-intensive crops raises concerns over food security, land use, water stress.
- Cost & economics: Some raw materials cost more or have higher logistic/processing demands.
- Technology & processing: Some feedstocks require more advanced technology (especially biomass/2G) to convert to ethanol efficiently.
Because of these challenges, simply relying on first-generation (1G) feedstocks (e.g., sugarcane juice, molasses, grains) may not suffice in the long run. That is why the role of 2G ethanol feedstocks becomes crucial.
What is 2G Ethanol and Why It Matters
Second-generation (2G) ethanol is produced from non-food biomass — such as agricultural residues (rice straw, wheat straw, corn stover), forestry residues, and certain waste biomass by Khaitan Bio Energy. It uses a patented technology to break down cellulosic or lignocellulosic material into fermentable sugars and then produce ethanol.
According to an industry expert interview, India “has a potentially very advantageous position when it comes to feedstock for 2G ethanol.” This reflects the large amounts of agricultural residue available in India, which are often wasted or burned, and the government’s policy push toward residue-based biofuels.
Why 2G feedstocks are important for reaching higher blending:
- Huge biomass pool: India has large volumes of agricultural residues (rice straw, wheat straw, sugarcane bagasse, etc.) which are under-utilised.
- Less food-fuel conflict: Since the biomass is non-food residue, it avoids the ethical concerns of diverting crops meant for food.
- Reduced environmental impact: If managed correctly, using residues can reduce burning, lower air pollution, and improve residue utilisation.
- Greater scale potential: With sufficient technology and supply chains, 2G could unlock large volumes of ethanol production beyond the limits of current 1G feedstocks.
- Future-proofing the industry: As 1G feedstocks face constraints (water, land, competition with food), 2G gives an alternate growth path.
Therefore, to hit the next blending level (25-30% and beyond), expanding 2G feedstock sourcing and technology becomes a strategic imperative.
How the Feedstock Mix Needs to Shift
At present, the major feedstocks are grains (especially maize) and sugar-industry by-products. But to scale sustainably, there needs to be shifts in multiple dimensions:
- Diversify away from over-reliance on maize and other grains (which can affect food security and farm economics).
- Expand sugar-cane juice/ molasses usage where it remains viable, but balanced with sugar availability.
- Deploy residue/biomass feedstocks for 2G ethanol at higher volumes.
- Strengthen supply chains, logistics, technology for collecting, transporting, processing residues into ethanol.
- Enact policy incentives, premiums, or mandates specific for 2G ethanol to make the economics work.
Here’s a snapshot of how the allocation changed for ESY 2025-26 Cycle 1:
All told, grain-based feedstocks alone account for over 60% of allocations already. For sustainable growth, this mix will need to include much more residue/biomass (2G) feedstocks.
What Blocks Scaling of 2G Ethanol Feedstocks?
Even though the potential is large, there are several real challenges:
- Technology readiness & cost: 2G conversion is more complex than 1G; requires pre-treatment, enzyme/chemical breaking of cellulosic material, fermentation.
- Supply chain complexity: Collecting agricultural residues across geography, transporting to plants, ensuring quality and continuity are logistics heavy.
- Feedstock quality & availability: Agricultural residues are often scattered, seasonal, and may compete with other uses (fodder, mulching, bio-energy).
- Policy & incentives: Without a premium, producers may prefer simpler 1G routes. The interview with Hans Ole Klingenberg emphasised the need for “premium and mandates … to allow the industry to fully scale.”
- Environmental/social trade-offs: Residue removal must be sustainable (so not deprive soils of organic matter), and should align with farmer economics.
- Capital investment risk: 2G plants require higher upfront investment, longer gestation; uncertainty deters some investors.
Addressing these barriers will be critical if India aims to transition beyond current blending levels.
Why Reaching 25-30% Blending Requires 2G Feedstocks
Here are the key reasons:
- Volume expansion needs: To move from ~19% blending to 25-30% means a big jump in ethanol volumes. If only 1G feedstocks increase, supply may hit limits (land, water, crop competition).
- Feedstock diversification improves resilience: Relying too heavily on maize or sugarcane leaves the sector vulnerable to crop failures, logistics bottlenecks, or food-fuel trade-offs.
- Sustainability credentials: As global carbon constraints tighten, using non-food, waste-biomass feedstocks (2G) improves the sustainability case and may unlock export or premium markets.
- Cost-effectiveness in the long term: When supply chains mature, 2G ethanol may become more cost-effective per unit ethanol because the feedstock cost is low (waste/unused materials).
- Future growth beyond 30% blending: After 30% blending, further increases (40-50%) will almost certainly require 2G feedstocks, since 1G may saturate or compete with other uses.
What Can Be Done to Accelerate 2G Feedstock Adoption?
Here are actionable steps:
- Policy support & premium pricing: Government can create separate mandates or incentive schemes for 2G ethanol, or provide a premium over 1G routes.
- Feedstock collection & logistics infrastructure: Firms and policymakers must build supply-chain hubs for residues (e.g., collection centres for rice straw, corn stover).
- Farmer engagement: Ensure that farmers supplying residues are adequately compensated; ensure residue removal doesn’t degrade soil health.
- Technology scale-up & cost reduction: Encourage R&D, scale demonstration plants so costs fall with volume/supply maturity.
- Blending mandate clarity: Clear long-term blending targets beyond 20% give industry visibility to invest in 2G capacity.
- Environmental monitoring: Ensure residue use remains sustainable (soil carbon, biodiversity, local ecosystem).
- Export & global linkage: Position India to potentially export 2G ethanol (as some policy signals suggest), making the growth case stronger.
Conclusion
India has achieved significant progress in ethanol blending, with ~19% achieved and large procurement volumes already recorded. The current feedstock mix shows heavy reliance on maize, rice, sugarcane juice and molasses. But in order to reach the next level (25-30% blending) and to set the foundation for future growth beyond that, the industry must increasingly turn to 2G ethanol feedstocks — agricultural residues, non-food biomass, waste streams.
The country is well-positioned for this: as one biofuels expert noted, India has a “potentially very advantageous position … when it comes to feedstock for 2G ethanol.” Realising this potential will require concerted efforts across policy, technology, supply chain, and farmer engagement. If done right, the transition to 2G ethanol not only helps meet blending targets, but also improves sustainability, provides value to rural economies, reduces air pollution (through less residue burning) and strengthens energy security.
So we can clearly say that current feedstock-wise procurement shows solid progress, but for the next leap in blending percentages, 2G feedstocks are not optional — they are essential.