Indian Economy and Issues Relating to Planning, Mobilization, of Resources, Growth, Development and Employment



  • Recently, the Department of Food & Public Distribution has notified a modified scheme for extending financial assistance for producing 1 Generation (1G) ethanol.
  • The aim is to achieve blending targets of ethanol with petrol (Ethanol Blending Programme).


It aims at blending ethanol w ith petrol, thereby bringing it under the category of biofuelsand saving millions of dollars by cutting fuel imports and decreasing carbon emissions.

Target: The target is to achieve 20% blendingof ethanol by 2025.


  • In 2018, the Central Government extended the ambit of the EBP programmeto extract the fuel from surplus quantities of foodgrainssuch as maize, jawar, bajra fruit and vegetable waste.
  • Earlier, only excess sugarcane productionwas allowed to be converted into ethanol for procurement under the programme.


  • Facilitate farmers to diversify their cropsto cultivate particularly maize/corn which needs less water compared to sugarcane and rice.
  • Investment in capacity addition or establishment of new distilleriesshall provide new employment opportunities in rural areas.
  • Bringing new grain based distilleriesin the entire country would resultin distributed production of ethanoland would save a lot of transportation costand thus prevent delays in meeting the blendingtarget.


  • Earlier, the Indian government had invited public comments for introducing adoption of E20 fuel(a blend of 20% ethanol with gasoline).
  • Pradhan Mantri JI-VAN Yojana, 2019The objective of the schemeis to create an ecosystem for setting up commercial projects and to boost research and development in the 2G Ethanol sector.
  • The Government has also reduced GST on ethanol for blending in fuel from 18% to 5%.
  • The Policy categorises biofuelsas “Basic Biofuels” First Generation (1G) bioethanol & biodiesel and “Advanced Biofuels” – Second Generation (2G) ethanol, Municipal Solid Waste (MSW) to drop-in fuels,
  • Third Generation (3G) biofuels, bio-CNG etc. to enable extension ofappropriate financial and fiscal incentives under each category.


Proper implementation of the biofuel policy and ethanol blending programme should ensure fuel requirements should not compete with food requirementsand that only surplus food crops should be used for fuel production.

Alternatives like 3 generation (derived from algae) and 4 generation biofuels(derived from genetically engineered plants or biomass) should be encouraged.


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