India is the fourth largest producer of ethanol in the world after Brazil, USA and China. Sugarcane is the raw material for producing Ethanol. In India, Ethanol is produced by fermentation of molasses, a by product of sugar.

Ethanol blending with petrol is being done in wake of increasing crude oil prices and global warming. At present 5% ethanol blending is being done in country. Government has announced to increase the ethanol blending from 5% to 10%.