Grainspan Boosts Ethanol Output with ₹520 Crore Investment in Gujarat Plants

Grainspan Boosts Ethanol Output with ₹520 Crore Investment in Gujarat Plants

Driven by government incentives and rising green fuel demand, Grainspan expands ethanol production capacity to support India’s ambitious fuel blending goals.

Grainspan Scales Up Ethanol Manufacturing with Strategic Investment

In a major move toward eco-friendly fuel advancement, Grainspan Nutrients has earmarked ₹520 crore for the construction of two cutting-edge grain-based ethanol plants in Ahmedabad district, Gujarat. These facilities, designed to produce ethanol using maize and rice, play a vital role in supporting India’s ethanol blending goals while also helping the company diversify and grow its revenue streams.

The initial facility, situated in Bhamsara Village, commenced operations in May 2023, introducing Gujarat to its inaugural venture in ethanol manufacturing from grains. The facility boasts a daily production capacity of 110 kilolitres (KL). Building on its success, Grainspan recently launched a second plant at the same site, with a significantly higher capacity of 240 KL per day and an investment of ₹360 crore.

Government Subsidies Drive Ethanol Industry Expansion

Grainspan’s expansion has been significantly supported by the Union Government’s interest subvention schemes aimed at enhancing ethanol production in India. Introduced between 2018 and 2022, these schemes offer subsidized interest rates on loans for establishing or expanding ethanol plants. Grainspan’s first ethanol plant was partly financed through a ₹120 crore loan obtained under a government-supported interest subsidy program.

While the first facility benefited from interest support, the second plant, despite being fully operational, did not receive similar subsidy support. However, the company remains confident in the commercial viability of both projects, driven by consistent demand from Oil Marketing Companies (OMCs) under the Ethanol Blending Programme (EBP).

Ethanol Production to Fuel Revenue Growth

The two ethanol units combined can now produce 350 KL of ethanol per day. Grainspan has set its sights on delivering around 8 crore litres of ethanol during the 2024–25 Ethanol Supply Year, which stretches from November through October. This volume is expected to grow to 12 crore litres in the following year, contributing over ₹800 crore to the company’s top line, given the fixed supply price of around ₹72 per litre.

Grainspan’s decision to diversify into ethanol manufacturing has paid off significantly. In the last fiscal year, the company recorded a 20% jump in revenue, reaching ₹758 crore. Of the overall revenue, ₹416 crore originated from the firm’s core food ingredients division, whereas ₹342 crore was generated through its ethanol business activities.

Ethanol Blending in Gujarat and Beyond

Grainspan operates two of the three grain-based ethanol plants currently active in Gujarat, underscoring the company’s leadership role in the state’s green fuel initiative. In addition to these, Gujarat is home to 13 sugarcane-based distilleries that contribute to the ethanol supply chain.

By June 8, 2025, Gujarat had achieved an ethanol blending rate of 18.9%, contributing close to 33 crore litres to the overall supply. On a national scale, ethanol integration into fuel has consistently climbed, with 548 crore litres blended by May 25 in the current Ethanol Supply Year 2024–25, reflecting a nationwide blending percentage of 18.74%.

India has outlined an aggressive goal to attain a 20% ethanol-to-petrol blending ratio by the 2025–26 financial year. The growing participation of companies like Grainspan in the ethanol sector is seen as a crucial driver in reaching this goal.

India’s Ethanol Journey: A Decade of Transformation

The ethanol landscape in India has evolved rapidly over the past decade. Back in 2013, India’s ethanol distillation infrastructure was limited to 421 crore litres, with fuel blending rates barely reaching 1.53%. By the year 2025, India’s capacity to produce ethanol has witnessed an exponential rise, reaching 1,810 crore litres—a fourfold expansion—driven by 816 crore litres from molasses processing, 136 crore litres via dual-feed systems, and 858 crore litres sourced from grain-based production units.

This massive scale-up is largely attributed to proactive government policies, including interest subsidies and mandates for fuel blending. This transformation triggered a massive escalation in ethanol supply to Oil Marketing Companies, rising from just 38 crore litres in 2013–14 to an impressive 707 crore litres in 2023–24—a growth of nearly eighteen times within a decade.

Looking Ahead: Ethanol as a Pillar of Sustainable Energy

With rising awareness around clean energy and energy independence, ethanol is increasingly being recognized as a critical alternative to fossil fuels. Companies like Grainspan are at the forefront of this transformation, not only meeting domestic requirements but also eyeing future export opportunities.

The recent push to convert existing sugarcane-based distilleries into multi-feed plants — enabled by a new interest subvention scheme launched in March 2025 — further underlines the government’s commitment to ethanol as a long-term energy strategy.

Final Thoughts

Grainspan Nutrients’ ₹520 crore investment in ethanol production marks a pivotal development in Gujarat’s and India’s green fuel journey. Backed by favorable government policies and strong market demand, the company has rapidly scaled its ethanol capacity while contributing significantly to national fuel blending targets.

As the country marches toward its 20% blending target by 2025–26, enterprises like Grainspan will play an essential role in shaping India’s energy future — one that leans toward sustainability, self-reliance, and innovation.

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