The story so far: On April 21, Union Road Transport and Highways Minister Nitin Gadkari said India should try to achieve 100% ethanol blending in the near future. He was speaking against the backdrop of India’s quest to become self-reliant in its energy needs.
One-hundred percent blending refers to pure ethanol. It has the same chemical formula regardless of its source. One litre of petrol will supply 45-55% more energy than one litre of ethanol as the latter is less energy-dense.
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Typical petrol engines are only certified up to E20 – meaning 20% blending. If the engine is older, the rating is also usually lower. To work with 85% or even 100% blends, i.e. E85 or E100, engines have to be flex-fuel, meaning they can run on any level of blending.
While flex-fuel vehicles have been available in Brazil since the 2000s, such vehicles are not widely available in India at present. Toyota has introduced a version of its Hycross Innova as a flex-fuel vehicle; it costs Rs 3-4 lakh more than the petrol version. Maruti Suzuki and Hyundai are known to have prototypes, with new launches in the FY26 to FY28 window.
These vehicles need to have corrosion-resistant fuel systems, different sensors, and better tuned engine control units, among other modifications.
In effect, one-hundred percent blending everywhere requires new vehicles, as well as new supply chains under ‘Make in India’.
In India, ethanol is currently predominantly produced from sugarcane as the feedstock. Sugarcane is a water-intensive crop that is also grown in already-water-stressed areas like parts of Maharashtra, and diverting it to make ethanol also disrupts from food prices and availability.
In response, the Indian government has been pushing ‘second-generation’ ethanol made from crop residues, such as rice straw, under schemes backed by the Indian Oil Corporation. The government also hopes this diversion will reduce the amount of agricultural residue that is burnt in North India.
Even as the demand for ethanol is increasing, the associated production costs are not lower than those of petrol, requiring policy support and — as is the case currently — government-administered pricing. There are indirect costs as well. Ethanol emits less carbon monoxide and particulate matter than petrol when combusted, so the health burden due to those pollutants can be expected to drop. However, sugarcane-based ethanol has to account for land use, inputs like fertilisers and pesticides, and water demand.
The government mooted the Corporate Average Fuel Efficiency (CAFE) standards in 2017. These standards limit the total carbon dioxide a manufacturer’s whole fleet of vehicles may release. In response, manufacturers with a larger share of high-emission vehicles like SUVs were forced to design more efficient models.
India enforced CAFE I and II in 2017 and 2022, respectively. CAFE III is more strict — it lowers the fleetwide average target by around 30% from CAFE II — and will kick in from April 1, 2027.
Using CAFE III to push towards E85 or E100 may help overcome the non-trivial public resistance to ethanol blending. E20 fuel is 6-7% less efficient than pure petrol and leads to lower mileage for the same volume of fuel, increasing expenses.
Although the Indian government launched its Ethanol Blending Programme in 2003, it remained dormant for a decade and was around 2% in 2014. But due to a renewed push, India achieved E10, i.e. 10% blending, in June 2022 ahead of its self-imposed deadline of November.
E20 fuel became available from petrol pumps from 2023 and replaced other blends on the market, including E5 and E10, from 2025. The National Biofuel Policy had originally said India would achieve E20 nationwide by 2030. Aggressive blending targets have also stoked industry bodies’ and auto manufacturers’ concerns about storage and transport infrastructure readiness.
India has tried to diversify its energy base by pursuing alternative sources of oil, although these have been frustrated by U.S. sanctions; securing new sources of uranium for nuclear reactors; and offering incentives for deploying renewables. However, domestic manufacturing vis-à-vis many energy technologies remains underdeveloped and initiatives to expand indigenous oil and gas production under the Hydrocarbon Exploration and Licensing Policy have delivered limited results.
In his statement, Mr. Gadkari said India eventually has to circularise its economy and produce hydrogen at $1 a kg to become an energy exporter, against the current global norm of $3-6/kg. Under its National Green Hydrogen Mission, India does plan to become a hydrogen exporter, and at $1/kg it’s expected to become competent with diesel. The mission also aims to produce hydrogen from municipal solid waste or sewage.
The hydrogen economy in India currently wants for commercial transport and storage options.
Published - April 24, 2026 07:45 am IST