India, as the world’s third-largest energy consumer, has traditionally depended on oil imports to meet its growing energy demands. This reliance not only poses challenges to energy security but also leads to a substantial outflow of foreign currency.
India’s 2018 National Policy on Biofuels was a significant step towards promoting the production and use of biofuels in the country. As per the policy, the Indian Government set the target of 15% ethanol blend rates in gasoline by 2023-24 and 20% by 2030. However, with the significant progress made in this sphere, the Cabinet Committee on Economic Affairs (CCEA) advanced this target to 2025. The aim is to significantly increase the use of ethanol as a renewable fuel source. Having achieved the 20% target in March 2025, the Ministry of Petroleum & Natural Gas is all set to raise the natural blending target to 30% by the end of the decade.
Currently, the major source of ethanol production is molasses which is a by-product of the sugar refining process. Given India’s surplus sugarcane production for years, sugarcane crop has played a crucial role in ensuring that India meets its 20% blending target towards enhancing energy security, bringing down carbon emissions and driving sustainability. Area under sugarcane cultivation expanded 2.5x times since the 1960s. Returns from sugarcane contribute ~1.1% to the GDP. Sugar production in 2024 recorded 34 MMT. The sugarcane industry ensures good financial returns, regulated by offtake agreements, while supporting regional economies in multiple Indian states. Innovations related to sugarcane have no doubt quadrupled productivity of the crop, with sugar technologists and agricultural experts having introduced high-yield varieties and modern techniques like nursery creation in sugarcane. However, in the 2024-25 season (October’24 –September’25), India’s sugar production is expected to decline as per ISMA (The Indian Sugar Mill Association) due to low sugarcane yield and low recovery in states like Uttar Pradesh and Maharashtra. If this trend were to continue, would sugarcane continue to be the leading crop for India and achieve its progressive ethanol blending targets going forward?
The Central Government Scheme – Pradhan Mantri Ji VAN Yojana, aimed at promoting biofuel, has been allocated Rs. 117 crore for FY26 up from previous year by 4X. Clearly there is focus from the government to expand bio-fuel production in the country. However, farming for fuel in a populous country, like India, with limited natural resources is possible only with high crop yield and high recovery rate. Therefore, if India were to further its EBP beyond 20%, while sustaining domestic consumption and exports, strategic focussed actions are critical. We discuss below some of the actions that would be critical for furthering India’s EBP goals.
The productivity or the average yield for most crops that can be used for biofuel production in India is below global average. For instance, sugarcane yield in India in 2023-24 was 78 tonnes per ha marginally lower than that of Brazil at 79 tonnes per hectare. Though, yield across agriculture regions may differ due to several factors, like, soil conditions, tillage, practices of farming, mechanisation etc, the significant variation in yield amongst the major sugarcane producing states, like, Tamil Nadu (105 tonne/ ha), Telangana (90 tonnes /ha), Uttar Pradesh (81 tonne/ ha), Maharashtra (78 tonnes/ ha and Karnataka (77/ ha) clearly indicates the potential to increase the yield of sugarcane. Further, sugarcane farming in India is largely labour intensive. Hence, technology adoption, mechanising manual operations, and use of artificial intelligence is key for increasing productivity of crops that are of national importance.
Further, sugarcane is a high-water-consuming crop. Leading cane growing states have faced acute water shortage in the past, with climate change only accentuating the issue. Due to efficient water and nutrient deployment, micro-irrigation has become one of the most valued innovations in sugarcane, especially in water-scarce regions. Despite significant increase in India, the area under micro irrigation coverage is only 8% of the gross cropped area versus 68% in the USA. With sugarcane grown on about 9.4 lakh hectares of cultivable land in Maharashtra only 2.25 lakh hectares is covered by drip irrigation, with low interest financing driving adoption of the technology. With ₹8,259.85 crore allocated in Budget 2025 to the Pradhan Mantri Krishi Sinchai Yojana (PMKSY), a 25% increase over last year’s budget, this reinforces the government’s commitment to enhance irrigation facilities and improve efficiency in water-use in farming.
Government initiatives too can play a larger role in the mechanisation of the crop and initiatives like SMAM (Sub-Mission on Agricultural Mechanization), signifies a step in the right direction.
The Indian government recently also approved 7 new schemes worth nearly Rs. 14,000cr to improve farmer incomes sustainably through increased use of technology in the sector, with a focus on initiatives like digital agriculture, crop science, livestock management, and supporting agricultural education, whilst strengthening India’s food security initiatives.
Crop residue has been identified by several researchers as a significant source for production of biofuels. The Biomass Atlas of India estimates that an additional 104 Mt of biomass is available in India in forest and wastelands that can be converted into biofuels (Baka, 2014). This suggests that if potential crop residue is fully explored, it would be adequate to go beyond 20 percent blending target. Also, maize, and damaged foodgrains like wheat and rice which are unfit for human consumption are also identified as potential sources of ethanol extraction.
Subsidies and policies supporting agriculture are promising for the future of farming. The two critical necessities of India to meet its blending mandates, are expansion of biofuel sources and increase in yield of biofuel crops. Given the amount of crop residues that India generates on an annual basis, and the ensuing pollution owing to the current disposal mechanisms for these residues, adoption of crop residue for ethanol production seems a very feasible solution. Secondly, the significant variation in yield of most crops which can be used for biofuel production suggests that yield in India is far lower than the potential yield. Reducing the gap between potential yield and actual yield will be the key to determine the future use of these crops in biofuel production. Technology adoption, mechanisation and artificial intelligence can help reduce the gap.
