India is one of the major importers of petroleum products worldwide. India imports 82 tonnes of crude oil from nations including Iraq, the United States, the UAE, Saudi Arabia, and others. In the years 2020–21, India imported 185 million metric tonnes of petrol for USD 55 billion. India needs to raise its annual oil imports due to the lack of sufficient oil reserves within the nation to meet the rising domestic demand.
The government is looking into several solutions to the problem of growing oil prices and oil imports, including increasing the production of renewable energy sources and using ethanol as a fuel substitute. The government has set a goal of achieving 20% ethanol blended with petrol by FY24.
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Since ethanol costs less than petroleum, the government predicts to save about USD 4 billion annually by not wasting money on oil imports. Additionally, since ethanol is less polluting than fuel, using it as fuel also contributes to reducing the environmental pollution.
With the abundant availability of sugar cane, numerous entrepreneurs across India are being encouraged to investigate the potential in the manufacturing of ethanol by the government’s desire to completely replace fuel with ethanol in a phased manner.
NPCS is helping business owners who are planning to set up ethanol production from sugarcane plants. Let’s talk about the government incentives, the raw materials and equipment required, and various aspects of successfully starting and operating the ethanol manufacturing business through sugarcane processing.
Indian Market Potential
Ethanol is considered an eco-friendly solution to the petroleum shortage issue. The Indian government is also trying way to add Ethanol to petrol. This is also the main reason that business owners are inclined towards the manufacture of ethanol. Ethanol is also used in cosmetics and personal care products. it is also widely used in paint, varnish, and house cleaning products and sanitizers.
Raw Materials Required
- Molasses – from Sugar Cane
- Yeast
- Urea
- Anti-foam
- Soft water and Process water
- Calcium hydroxide
- Salt
- Electricity supply
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Area
The location selected should meet all government protocols and regulations which also include safety guidelines. To start an ethanol production business with a 50 KLPD plant you will require approximately a land of 15-acre area, with an 850-kW electricity connection.
Investment
The initial investment will be around Rs 60 crores because the set-up, machinery and equipment instalment, labour cost will all come up to a hefty amount. This plant requires a larger area of approx. 1lakh sq. metre, which, therefore it is wise to search for cheaper land to focus on investing in other things properly.
The investment also includes arranging raw material which is sugarcane. Obtaining sugarcane from farmers directly or from wholesalers will also require bulk finances.
Profit of Margin
The Indian government is also supporting entrepreneurs who are focusing on ethanol production through sugarcane or food grains. They are providing grants and subsidies to start-ups for initiating this business. On average a company can earn 5%-10% in a month and a 35%-40% profit margin annually.
Registration and Licence Required
- Before starting the ethanol manufacturing business, the entrepreneur will have to receive an environment clearance certificate. This clearance takes around 1-2 years.
- After this NOC is received from the State Pollution Control Board.
- PD2 licence from Excise Department
- Licence for direct purchase and selling of product.
- IFSC Licence
- Licence from Food Department
- Registration is required in the District Industry Centre.
- ISI Registration
- ESI and Labour Department Registration
- Start-ups can avail of subsidies and grant schemes provided by the Centre and State governments.
Related Feasibility Study Reports: Ethanol as Biofuel – Manufacturing Plant, Detailed Project Report, Profile, Business Plan, Industry Trends, Market Research, Survey, Manufacturing Process, Machinery, Raw Materials, Feasibility Study, Investment Opportunities, Cost And Revenue
State Policies to Promote Ethanol Business
The Assam Government recently announced the “Assam Ethanol Promotion Policy-2021”, intending to attract investments and boost the use of ethanol in the energy, transportation, pharmaceutical, cosmetic sectors, and many more throughout the state. Up to March 31st, 2026, the programme that offers financial incentives to businesses who produce Ethanol is still in effect.
Another state in the nation with a zealous policy for promoting Ethanol manufacturing is Bihar. The first Indian state to create a policy for Ethanol manufacturing is Bihar. Under the scheme, the government offers up to Rs. 5 crores cash incentives and authorises the production of Ethanol from maize, which was previously limited to sugarcane. All provinces, except for Bihar and Assam, have implemented comparable policy measures to promote Ethanol production within their borders. Many different state governments are thinking about coming up with specific policies to promote Ethanol production through sugar cane or food grains.
Read our Book Here: Handbook on Biofuel, Ethanol and Bioenergy Based Products
Conclusion
This is a golden opportunity for start-ups as they can take subsidies and avail grant schemes from the state government in case of funds shortage. If you need any reports and project analysis, you can approach NPCS. We are a team of highly experienced professionals from different backgrounds. We can provide any relevant data that you require for a smooth business initiation.
If you need information about Ethanol Production from Sugarcane Business, then contact NPCS. The project report from Entrepreneur India enables you to choose a profitable project for investing in or diversifying into by shedding light on crucial areas including business size, the product’s market potential, and the motivations behind investing in the product. By defining the target client organisation for the product, the study helps you promote and position it effectively.
Frequently Asked Questions:
- What are the Key Factors to Consider When Selecting a Suitable Location for an Ethanol Production Plant Using Sugarcane as a Feedstock in India?
- Selecting the right location is crucial for the success of your ethanol production business. Factors to consider include proximity to sugarcane farms, availability of water resources, transportation infrastructure, and access to markets for both ethanol and by-products like molasses. Environmental considerations and land acquisition should also be taken into account.
- What are the Financial Requirements for Establishing an Ethanol Production Plant in India, and are there any Government Subsidies or Incentives Available?
- The financial requirements for setting up an ethanol production plant can vary significantly depending on the scale of the operation. You’ll need to budget for land, infrastructure, equipment, and working capital. In India, there are often government subsidies and incentives available to promote ethanol production, such as soft loans, tax benefits, and incentives for using sugarcane as a feedstock. It’s advisable to research and leverage these opportunities.
- What are the Environmental and Sustainability Considerations When Starting an Ethanol Production Business from Sugarcane in India?
- Ethanol production can have environmental impacts, such as water usage and emissions. It’s important to implement sustainable practices, including water recycling, energy-efficient processes, and waste management. Compliance with environmental regulations is crucial. Additionally, some states in India have specific sustainability criteria that must be met to produce ethanol.
- How Can I Ensure a Consistent and Cost-Effective Supply of Sugarcane for Ethanol Production in India?
- Securing a reliable and cost-effective supply of sugarcane is essential for your ethanol production business. Consider entering into agreements with sugarcane farmers or cooperatives for a steady supply. You should also monitor sugar and sugarcane price trends and have contingency plans in place for supply disruptions, such as diversifying your feedstock sources if feasible.
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