The government has hiked ethanol price for second time within a fortnight to keep up with its target of achieving 20 per cent blending by 2025. At present, 10 per cent ethanol is blended into petrol, and the government is looking to double this.
Ethanol is an organic compound that is produced from biomass. The reason why ethanol is blended with petrol is that it reduces vehicular emissions.
Besides, ethanol can add to the income of farmers and also help the government saving more than Rs 300 billion of foreign exchange per annum.
Rajinder Mittal, MD of BCL Industries, said that OMCs decision to hike the price of ethanol twice is significant. The government does not want its target of achieving 12 per cent blending to be derailed in the current supply year.
He added that the hike was needed after Food Corporation of India (FCI) suspended the supply of subsidised rice to distilleries. This led to an increase in the price of damaged or broken rice in the market, forcing distilleries to curtail their production.
"Hence, the government proactively upped the price of ethanol once it sensed that the initial hike was inadequate in offsetting the higher cost," he said.
"This measure instils confidence in government’s commitment to achieving 20 per cent blending by 2025. The will help distilleries to operate at optimum capacity, which would eventually encourage additional capex and benefit," he added.
Earlier on Tuesday, Union Minister of Road Transport & Highways Nitin Gadkari launched a 100 per cent ethanol-fueled variant of Toyota's Innova car. He said that ethanol being an indigenous, eco-friendly and renewable fuel holds promising prospects for India.
He said the increased demand for ethanol for blending with petrol and diesel will change the agriculture economy of India making farmers "urja daata".
"The ethanol industry is a boon for farmers. The demand for ethanol will grow in the country. It will change the agriculture economy of India," he said.
