India Ethanol Market 2024–203

Reports Description

According to current market research conducted by the CMI Team, the India Ethanol Market is expected to record a CAGR of 14.5% from 2024 to 2033. In 2024, the market size is projected to reach a valuation of USD 3.1 Billion. By 2033, the valuation is anticipated to reach USD 6.2 Billion.

Ethanol, also known as ethyl alcohol (chemical formula  C₂H₅OH), is a colorless, flammable, renewable biofuel. It is similar to the alcohol consumed in alcoholic beverages but is produced and used primarily for industrial/fuel purposes.

Ethanol is a renewable energy product because it can be produced from various biomass feedstocks such as crops (sugar cane, corn, and other agricultural waste products). The most common mechanism by which ethanol is made is through the fermentation of sugars contained in crops. Yeast is used to convert sugars to ethanol and carbon dioxide.

India Ethanol Market – Significant Growth Factors

The Indian ethanol Market presents significant growth opportunities due to several factors:

• Rise in Government Support and Ethanol Blending Mandates: The Indian government has provided strong policy backing for ethanol production and blending. The Ethanol Blending Program (EBP), which targets 20% ethanol blending (E20) by 2025, is a major growth driver. Government subsidies, tax incentives, and minimum procurement price guarantees for ethanol have encouraged large-scale investments in ethanol production capacity.

• Rising crude oil prices and energy security: India’s high dependence on crude oil to meet energy needs makes it very vulnerable to fluctuations in global crude price changes, which justify a search for alternative fuels such as ethanol. At high crude oil prices, ethanol comes very close in terms of cost and is an attractive alternative to conventional fuels.

• Increase the production of second-generation (2G) ethanol: Developing second-generation (2G) bioethanol technology that uses non-food biomass, like rice straw and corn stalks, would make it possible to make ethanol from sources other than sugarcane. This would solve the problem of how to make fuel from food and reduce the environmental problems that come up when sugarcane is grown.

• Escalating demand for cleaner, low-carbon fuels: Nowadays mostly because of the growing concern for environmental issues such as pollution reduction and the greenhouse emissions of such fuels. It is taking ethanol as a transportation renewable biofuel that has led to appreciable reductions in carbon intensity.

• The ramp-up of ethanol infrastructures: with related investments, the ethanol industry is witnessing serious investments in setting up ethanol production plants, blending infrastructures, and logistics.

India Ethanol Market: Mergers & Acquisitions and Investments

The India Ethanol Market has seen continuous mergers and acquisitions in recent years. At the same time, companies sought various methods to diversify and grow their respective business expansions and promote synergies to refine and enhance their value propositions to customers and profitability. The India Ethanol Market is a growing and dynamic market for investments and mergers and acquisitions, with a few notable deals summarized:

• In February 2021, Balrampur Chini Mill invested in and acquired new ethanol production facilities to nearly double its existing ethanol production capacity while diversifying its production model from sugar to Biofuels.

• In June 2021, Shree Renuka Sugars wholly invested in expanding ethanol production capacity and distillation capacity growth by retrofitting their existing distillation capacity to achieve an advantage over their production competitors. This investment will commence in 2022.

• In March 2022, Godavari Biorefineries announced their expansion, which involved injecting USD 100 million into production capacity through the TPG Rise Climate Fund, with the intention of operational expansion.

These mergers and acquisitions helped companies enhance their offering portfolios, expand their presence in the market, and take advantage of Indian ethanol Market growth opportunities. This trend will likely continue as companies seek competitive advantage in the market.

COMPARATIVE ANALYSIS OF THE RELATED MARKET

India Ethanol Market: Significant Threats

The India Ethanol Market faces several significant threats that could impact its growth and profitability in the future. Some of these threats include:

• Feedstock Availability and Price Fluctuations: In India, feedstock availability and price fluctuations are issues related to the management of sugarcane-based ethanol because it utilizes mostly sugarcane and grain as feedstocks for ethanol production. These feedstocks are subjected to seasonal and water availability issues and climate conditions that impact costs. Price fluctuations can certainly impact feed stock availability and price, which may dramatically increase the cost per unit of production and profitability to their customers, who mostly rely on sugarcane-based ethanol.

• Water and Land Use: Ethanol production (especially from sugarcane is relatively water greedy), with growing environmental issues regarding water availability, with endemic issues regarding waste and inefficiencies of existing and future water infrastructures.

• Competition from Electric Vehicles: As India ramps up its efforts toward electrification of transportation, the shift towards electric vehicles (EVs) poses a significant threat to the ethanol market. EVs are independent of internal combustion fuels or biofuels such as ethanol, and this development in the use of these vehicles is bound to reduce the necessity for ethanol gasoline.

• Infrastructure and Logistical Challenges: Ethanol blending capacity constraints are one reason the government’s ethanol blending targets have not been achieved. Most rural and small oil marketing company fuel stations, such as kiosks, do not have the necessary facilities to put in and sell ethanol-blended fuel. These barriers to efficient infrastructure development could hamper the growth of ethanol production and supply, thereby hindering the achievement of the E20 blending target and affecting the whole market.

India Ethanol Market: Segmentation Analysis

By Source:

• Sugarcane-based Ethanol: This ethanol source is produced mainly from the fermentation of molasses, a by-product of sugar production. The Indian government, as part of its renewable energy initiatives, has been promoting sugarcane ethanol to reduce dependence on fossil fuels and to enhance energy security. The introduction of the Ethanol Blending Program- with a target of merging with petrol by up to 20% by 2025- has sharply aided these sugarcane ethanol producers.

• Corn-based Ethanol: The drive for corn-based ethanol is because the potential supplement is sugarcane-based in Karnataka and Andhra Pradesh. The fact that corn processing and ethanol production infrastructure are in their infancy may restrict such growth within this segment.

• Others: This category entails several alternative feedstocks for ethanol production, from cereal and cereal straw to fruits and other organic materials. Using these feedstocks is congruent with India’s objectives of promoting waste-to-energy initiatives and supporting a circular economy. However, since the use of this source for ethanol production is still developing, ongoing research and development efforts focused on improving efficiency and reducing the costs of producing ethanol from these materials are on the rise.

By End-Use:

• Fuel & Transportation: Ethanol-blended fuel is a significant step towards meeting environment-friendly transportation goals in India and reducing greenhouse gas emissions. Mandatory blending norms, flex-fuel vehicle production, and investment in ethanol infrastructure spending will further direct the demand.
• Industry: Ethanol has already found its use in industry as a solvent, cleaning agent, and intermediate in the production of various chemicals. It is even used as a solvent or an intermediate in paints, cosmetics, and textiles. Acetic acid and ethylene, which are used in the manufacturing of several other products, are produced from ethanol. The increase in manufacturing activity is directly going to increase the demand for industry-grade ethanol.

• Beverages: In the Beverage sector, ethanol is a chief raw material for beverages such as whisky, rum, and vodka; thus, the demand story on the premium side has been dynamic, which goes for manufacturers of spirits with most premium and craft spirits manufactured with high-quality ethanol. Second, the carbonated drink segment also uses ethanol for flavouring and preservation. There is no harm in putting a bet on India’s middle class habit of consuming natural drinks.

• Pharmaceuticals: In the pharmaceuticals sector, it is used as an excipient and a solvent of formulations for various medicines and vaccines, and it is also used as an antiseptic in skin cleaning. Since COVID-19, the demand for Antiseptics has been further raised. Large medicine manufacturing facilities and rising India healthcare needs shall match rising manufacturing output and increasing export opportunity.

By Purity Grades:

• Fuel-grade ethanol: This grade typically contains 99% Purity and is suited for the transport sector, where it is blended with petrol. This is essential in India to meet the government’s Ethanol blend requirements to reduce India’s dependence on crude and Greenhouse gas emissions. The feedstock for the production of fuel ethanol is sugarcane and other feedstocks; thus, the sugar mills are the crucial suppliers for such a grade.

• Industrial Grade Ethanol: Industrial grade ethanol, ranging from 95% to 99%, is used across several industries, such as textiles, cosmetics, and chemicals. It is utilized as a solvent, cleaning agent, ingredient, or precursor for making countless products. This has led to a growing emphasis on environmentally friendly and sustainable solvents in industries as they look to lower their carbon footprint and, therefore, are looking to utilize industrial grade ethanol.

• Pharmaceutical Grade Ethanol: The pharmaceutical grade ethanol market sees ethanol with a purity exceeding anything more than 99.5%. In producing medication, vaccines, mirco-biological matrixes, and other healthcare goods, the purity of the ethanol used is crucial. However, given the current pandemic, demand for pharmaceutical-grade ethanol, such as ethanol ingredients for sanitizers or disinfectants, is experiencing a sharp spike.

Report Scope

Competitive Landscape – India Ethanol Market

The India Ethanol Market is highly competitive, with many global manufacturers and retailers. Some of the key players in the market include:

• Indian Oil Corporation Ltd
• Bharat Petroleum Corporation Limited
• Hindustan Petroleum Corporation Limited
• Balrampur Chini Mills Ltd
• Praj Industries Ltd
• Shree Renuka Sugars Ltd
• Triveni Engineering & Industries Ltd
• Bajaj Hindusthan Sugar Ltd
• Godavari Biorefineries Ltd
• DSCL
• Jain Irrigation Systems Ltd
• Simbhaoli Sugars Ltd
• Others

These companies operate in the market through various strategies such as product innovation, mergers and acquisitions, and partnerships.

New players entering the Indian ethanol market are adopting innovation and development to differentiate themselves and gain traction. The rising demand for sustainable fuel alternatives and advancements in agricultural practices and ethanol production technology support this trend.

The COVID-19 pandemic has also spurred higher demand for pharmaceutical-grade ethanol, particularly in sanitizers and disinfectants. However, challenges such as fluctuating feedstock prices and infrastructure development remain critical considerations for future growth. The market is poised for expansion as India seeks to enhance energy security and sustainability.

The India Ethanol Market is segmented as follows:

By Source

• Sugarcane-based Ethanol
• Corn-based Ethanol
• Others

By End-Use

• Fuel & Transportation
• Industrial
• Beverages
• Pharmaceuticals

By Purity Grades

• Fuel Grade Ethanol
• Industrial Grade Ethanol
• Pharmaceutical Grade Ethanol