NABARD ARDNABARD Grade AState AAO
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Role of Ethanol in India
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What is Ethanol?
- Powers vehicles, aids the spirits industry, and cuts India’s imports of crude oil.
- Harmful emissions are reduced, air quality is improved, and ₹1.1 trillion has been saved in foreign exchange because of ethanol blending.
- In the last decade, from savings of 50 million carbon dioxide equivalent in a year, the increase in ethanol use has consistently been ahead of this target.
- New trade avenues to farmers would create a more even marketplace for their crops such as sugarcane.
Some of the challenges therein include:
- Feedstock and Supply Constraints:
- Ethanol in India is produced mainly from sugarcane, which competes with food needs as well as government restrictions on sugarcane for ethanol production.
- Resistance from Automobile Industry:
- There is resistance to flexi-fuel vehicles from the automobile industry due to Various technical and economic obstacles.
- Pricing Issues:
- The pricing issue of ethanol still remains contentious and distillers have argued that ethanol prices be dynamically adjusted.
- Concern for Investors:
- Uncertainty on ethanol supply as well as unstable pricing will definitely be a significant concern for the investors.
- Increased Ethanol Production:
- The government has heavily invested in ethanol distilleries, which could amount to up to ₹35,000 crore by 2031 to meet the ethanol requirements.
- Government Support:
- Continued support from the government through interest subvention schemes for loans and subsidies for ethanol manufacturers will be crucial to sustaining growth in the ethanol sector.
- Flexi-Fuel Vehicles:
- It is essential to encourage the automotive sector to start flexi-fuel vehicle productions by offering tax breaks or subsidies.
- Flexible fuel vehicles (FFVs) are cars that can run on gasoline or a blend of gasoline and ethanol.
- It is essential to encourage the automotive sector to start flexi-fuel vehicle productions by offering tax breaks or subsidies.
- Sustainability Feedstock Supply:
- To achieve sustainable ethanol production, India must consider second-generation feedstocks and enhance coordination among ministries dealing with biofuels, agriculture, and transportation.
- Market Dynamics:
- Ethanol prices need to be more flexible in order to sustain the program for a long time in the future.
