Problems between sugar mill owners and oil marketing companies have resulted in only 1.4% ethanol blending through february this fiscal year which is way less than the blending target of 5% and lesser than the last year’s achieved blending level of 2%.The National Policy on Biofuels of India identifies the sugar cane molasses as the feedstock suitable under Indian conditions for ethanol production for blending purpose and that makes the sugarcane mills as the biggest suppliers of bioethanol.
The high state-level levies on the biofuel and the requirement of obtaining permits from authorities have been sited as the major impediments for producing bioethanol by Sugar Mills. The government has set the selling price of ethanol for sugar mills @ Rs. 48.50/litre if the depo of the oil marketing company is within 100 km from distillery and @49.50/ litre if the depo is beyond 300 km. The producers claim that the long distance transportation also reduces their margin.
India needs approximately 115 crore litres of ethanol to meet the 5% target.