Maize in Ethanol Push Strains India's Fuel Policy

What Happened

India’s policy aimed at reducing reliance on imported crude has increased the use of maize for ethanol production. Maize now accounts for roughly half of the country’s ethanol blended into petrol, up from near zero three years earlier. This shift coincides with higher maize prices and a rise in domestic maize demand from distilleries, poultry, and animal-feed sectors. The government purchases maize‑derived ethanol at ₹71.86 per litre, the highest rate paid for any feedstock. Meanwhile, crude oil, even with regional price pressures, costs India around ₹55 per litre, with potential calm markets dipping below ₹45. Distilleries have absorbed more domestic maize, contributing to a broader import dependence on maize. By 2024-25, India became a net maize importer for the first time in decades, purchasing about 0.9 million tonnes valued at roughly $220 million, mostly from Myanmar and Ukraine. Domestic maize prices rose from about ₹15,000 to ₹25,000 per tonne over four years. Approximately 127 lakh tonnes of maize are contracted for ethanol, about a third of the year’s production, intensifying competition with feed users.

Why It Matters

The policy mix—high maize feedstock use, elevated maize prices, and growing import needs—has made ethanol blending more costly. The government’s push toward maize-based ethanol is linked to the Roadmap for Ethanol Blending in India 2020-25, which argued that sugarcane alone could not meet the 20% blending target. The shift affects costs across industry segments, including distilleries and animal-feed sectors, and alters the balance between domestic grain use and exports. With maize becoming the primary raw material for ethanol, the economics of ethanol production have changed relative to sugarcane-based routes, which have had price pressures since 2022.

Background

Since 2006, ethanol blending in India has evolved from a 5–10% use level toward higher targets. The Roadmap for Ethanol Blending in India 2020-25, a collaboration between NITI Aayog and the Petroleum Ministry, recommended diversifying away from water-intensive crops in pursuit of a 20% blend. Maize, a kharif, rainfed crop with lower per-hectare yields than sugarcane, has been introduced as a less water-intensive option, even though its yield (~3.5 tonnes/ha) is far below sugarcane’s (~80 tonnes/ha). In 2024, India achieved E20 blending five years ahead of schedule after the policy shift.

Key Facts

• Maize now provides close to half of India’s ethanol blended into petrol.
• Maize share of ethanol rose from negligible levels to roughly 50% over the period described.
• Maize yield is about 3.5 tonnes per hectare; sugarcane yield is about 80 tonnes per hectare.
• India exported maize worth about $764 million in 2022-23; by 2024-25 exports fell to about $201 million (roughly 5.5 lakh tonnes).
• In 2024, India became a net maize importer for the first time in decades, importing ~0.9 million tonnes valued at ~$220 million, mainly from Myanmar and Ukraine.
• Domestic maize prices rose from ~₹15,000 to ₹25,000 per tonne over four years.
• About 127 lakh tonnes of maize are contracted for ethanol—nearly one-third of annual production.
• The government pays ₹71.86 per litre for maize-derived ethanol, the highest rate among feedstocks.
• Litre price of crude oil in this context is around ₹55 per litre, with lower prices in calmer markets.
• Ministry data indicate that blending costs exceed the cost of producing petrol without ethanol when crude is near $70 per barrel.

What Happens Next

The report does not specify scheduled next steps beyond the ongoing implementation of the 2020-25 roadmap and the observed shift in feedstock mix. Further policy and market developments will likely hinge on balancing ethanol blending targets with maize supply, feedstock competition, and import dynamics.