Higher ethanol blending: India’s next energy leap must begin now

The case for higher ethanol blends in India is no longer only about cleaner mobility. It is now about strategic resilience. The recent turmoil in West Asia has again reminded us that an energy-importing nation developing at a rapid phase cannot afford complacency when global supply chains are under stress. India still depends on imports for roughly 87% of its crude oil needs, and senior policymakers have pegged the national oil import bill at about ₹22 lakh crore annually. That is not merely an economic burden; it is a strategic vulnerability.

India has already crossed the threshold where ethanol is no longer a pilot-scale idea. E20 is now the national baseline, with E20 petrol mandated across the country from April 1, 2026, and the government is evaluating to move toward higher blends. That is the right direction. But if India is serious about energy sovereignty, then the national conversation must move from “whether” to go beyond E20 to “how fast” and “under what policy architecture” we can responsibly scale to E25, E85 and, over time, E100.

India is more ready than many assume

What is especially encouraging is that the production side is no longer the principal constraint. The country is now producing over 1,800 crore litres of ethanol annually, with total installed capacity estimated at around 2,200 crore litres. This scale has been achieved through sustained investments, feedstock diversification, and policy support. In other words, by any reasonable estimate, India has already built ahead of E20. The manufacturing ecosystem is ready to support higher blends; what it needs now is demand visibility and policy certainty.

E25 is within visible striking distance if policy support aligns with existing capacity creation. E85 and E100 are not immediate volumetric goals for the entire fleet, but they are entirely credible medium-term pathways for flex-fuel platforms, commercial fleets and targeted geographies.

The policy bottlenecks, however, are real and must be addressed upfront. First, the economics of diversion must remain rational. If sugar prices and the minimum selling price of sugar do not keep pace with rising cane costs, and if ethanol procurement prices do not adequately reflect feedstock economics, then the incentive to produce and divert sugar for ethanol weakens at precisely the moment when India needs more of it. Second, the procurement architecture must remain balanced and predictable across feedstocks and producer categories, because under-utilised capacity destroys investor confidence. Industry voices have been flagging stagnant ethanol prices, lower allocations and policy imbalance as reasons for idle capacity even after large capital commitments.

The roadmap must be national, phased and bigger than transport alone

India should now think in three concentric circles. The first is to stabilise E20 economics and create a transparent glide path to E25. The second is to accelerate the flex-fuel vehicle ecosystem, supported by the E85-and-above vehicle norms and the CAFE III framework, which could give flex-fuel vehicles regulatory recognition alongside other clean-mobility technologies. The third is to build new demand pools beyond road transport. Ethanol should not be viewed only as a transport fuel. Industry bodies are already urging serious adoption of ethanol-based cooking solutions, and that is a strategic idea whose time has come, especially in a country where imported LPG and crude still leave households and the economy exposed to global shocks.

The broader national gains are already visible. The latest official tally shows that the ethanol-blending programme has enabled more than ₹1.5 lakh crore in payments to farmers, saved over ₹1.70 lakh crore in foreign exchange, reduced net CO2 emissions by about 736–869 lakh metric tonnes, and substituted more than 289 lakh metric tonnes of crude oil. The government has also stated that the E20 programme has saved about ₹1 lakh crore over the last decade. On the same base, imagine how much an E25 or E85 can save, subject to vehicle readiness, sustained feedstock availability and petrol-demand assumptions.

We can take lessons from Brazil. Their long-horizon policy consistency, flex-fuel adoption and fuel-retail readiness transformed biofuels from an agricultural adjunct into a national strategic asset. However, India has one advantage that Brazil did not in the early years: a diversified feedstock base across sugarcane and grains. That gives us the ability to design a distinctly Indian roadmap, one that advances energy security, rural incomes, decarbonisation and industrial investment together.

India has already demonstrated that it can deliver E20 faster than most expected. The next chapter should be more ambitious. Higher blending is not an executional detail; it is a statement of national confidence. If policy now aligns pricing, procurement, vehicles and infrastructure, India can move from ethanol blending to ethanol leadership. And that would be good for our economy, our farmers, our environment, and above all, our sovereignty.

By: Tarun Sawhney, Vice Chairman and Managing Director, Triveni Engineering & Industries Ltd.