₹40,000 crore ethanol push nears oversupply, AIDA urges use in kitchens

India’s aggressive ethanol push is approaching an inflection point. With blending targets largely met and production capacity expanding rapidly, the industry is now staring at a potential surplus and is urging the government to open up a new avenue: cooking fuel.

In a letter to the petroleum ministry, the All India Distillers’ Association (AIDA) said the country has already achieved 20% ethanol blending in petrol, with over 353 crore litres blended as of February 28, 2026. Backed by investments of about ₹40,000 crore in recent years, the sector has built significant capacity that is now beginning to outpace demand from fuel blending alone.

Installed production capacity currently stands at around 2,000 crore litres annually and is expected to cross 2,400 crore litres by 2026-27. This expansion, the industry body warned, could create a sizeable surplus unless alternative demand streams are developed. “A potential surplus is likely to emerge, necessitating the creation of additional demand avenues,” the association said in its letter.

Cooking fuel emerges as next frontier

That concern is driving a fresh proposal to position ethanol as a cooking fuel, particularly for households in semi-urban and rural areas, as well as small commercial establishments.

Given the recent geopolitical disruptions that have tightened LPG supplies, while forcing prioritisation of domestic households and leaving commercial users facing constraints. The industry argued that it exposes the risks of relying heavily on a largely imported fuel for clean cooking. “This over-dependence on a single imported clean cooking fuel underscores the urgent need to diversify India’s cooking energy mix,” the association said.

Ethanol, by contrast, offers a domestic alternative. The association said ethanol-based cooking solutions could reduce dependence on imported LPG, improve energy security, and provide a productive outlet for surplus supply.

There is also a cost argument. Ethanol used for cooking can be in its hydrous form, which avoids the additional dehydration process required for fuel blending. This makes it potentially cheaper than commercial LPG, even if its calorific value is lower. 

From a performance standpoint, ethanol delivers roughly 70-80% of LPG’s energy on a volumetric basis. However, the industry said improvements in stove design and fuel delivery systems can bridge this gap for everyday cooking needs. Ethanol stoves currently generate around 1.5 to 3 kW of heat, which is considered adequate for typical Indian kitchens. 

Beyond cost and availability, the environmental case is also central to the pitch. Ethanol burns cleaner, producing lower particulate emissions and potentially reducing indoor air pollution. Its decentralised production model could further support local energy ecosystems while boosting demand for agricultural feedstocks such as rice, maize, and sugarcane.

What this really means is that the ethanol story is moving into its next phase. The initial focus was on blending with petrol to cut crude imports. With that milestone largely achieved, the challenge now is to sustain growth without creating excess capacity.

To enable this shift, the industry has sought a policy framework to support phased adoption of ethanol as a cooking fuel. This includes setting safety and performance standards for ethanol stoves and targeting early deployment in semi-urban and commercial segments.

The association said it is already working on a white paper and prototype for ethanol-based cooking solutions in collaboration with a research institute, aimed at validating the technology and mapping implementation pathways.