Beyond E20: What India’s ethanol industry is aiming for next

But the push towards E20 has also raised concerns among consumers and parts of the auto industry, particularly over mileage, vehicle compatibility and the long-term impact of higher ethanol blends on older vehicles. As the debate around E20 continues, the government is already looking at what comes next.

Now, E25 is on the cards, while E85 is being rolled out for flex-fuel vehicles. Ethanol is also being explored for uses beyond petrol, including sustainable aviation fuel, chemicals, pharmaceuticals, marine fuel and even cooking fuel.

But while the country is preparing for higher blending levels, ethanol producers are sitting on huge unused capacity. The ethanol industry says the road ahead is not going to be easy.

While India’s ethanol programme has helped cut crude oil imports and given farmers an additional source of income, many ethanol producers are struggling with low demand and excess capacity.

Pushpinder Singh, President of the Bharat Independent Ethanol Producers Association (BIEPA), spoke to Financial Express about what the industry needs as India moves beyond E20. 

India’s ethanol story is bigger than just E20 

With India importing nearly 88.5% of its crude oil, BIEPA said domestically produced alternate fuels can reduce exposure to global oil prices, shipping disruptions and geopolitical shocks. At the same time, ethanol production capacity has nearly tripled over the past decade, from around 680 crore litres to almost 2,000 crore litres, making India the world’s third-largest ethanol producer after the US and Brazil.

But the big question now is what happens after E20.

The Bureau of Indian Standards has already notified fuel-quality standards for E22, E25, E27 and E30, while the government has started selling E85 at 48 outlets for flex-fuel vehicles. This is planned to rise to 500 outlets by December 2026 and around 5,000 by December 2027.

Union minister Nitin Gadkari has also approved rules allowing 100% ethanol, or E100, as a standalone fuel. Automakers such as Maruti Suzuki and Hero MotoCorp have started rolling out flex-fuel vehicles.

But ethanol’s future may go beyond transport. The industry is exploring its use in sustainable aviation fuel, chemicals, pharmaceuticals, marine fuel and other sectors that could create fresh demand.

E85 is the next big step, but consumers will decide 

As India looks beyond E20, Singh said it is important to get one point right: the next high-blend target for road transport is E85, not E80. “India has sufficient installed ethanol capacity to move well beyond E20,” Singh said.

But moving the entire country to high ethanol blends will take time. According to Singh, four things will be important for the transition: more flex-fuel vehicles, dedicated fuel infrastructure, a stable policy for feedstock and, most importantly, attractive prices for consumers.

Without “attractive consumer pricing and clear economic incentives,” he warned, adoption could remain slow even if India has enough ethanol.

The government has already started building the infrastructure needed for E85. Petroleum Minister Hardeep Singh Puri has said E85 could be priced around ₹20 per litre cheaper than regular petrol. Government projections suggest India’s ethanol blending rate could reach nearly 26% by 2030-31 as the E85 network expands.

Is sustainable aviation fuel ethanol’s next big opportunity?

The next phase of India’s ethanol story may not be limited to petrol pumps.

Singh said there are already established uses for ethanol in chemicals, solvents, pharmaceuticals and sanitisers. But one of the biggest opportunities could come from aviation.

He described sustainable aviation fuel made through alcohol-to-jet technology as “its next major energy opportunity.”

Ethanol could also find a role in marine fuel. However, Singh said these applications are still “under scrutiny” when it comes to their commercial viability. 

Can ethanol find a new market in cooking fuel? 

There has also been growing interest in using ethanol as a cooking fuel. Singh, however, was cautious about this idea. Ethanol “can be used in specially designed liquid fuel stoves,” he said.

But using it across the country would not be simple. “Nationwide adoption would require dedicated appliances, safe distribution, competitive pricing and consumer acceptance,” he said.

That means ethanol-based cooking fuel is still some distance away from becoming a commercial option, despite the attention it has received. 

Ethanol prices may need to rise 

The cost of producing ethanol is another concern. Feedstock accounts for around 80% of the total production cost. These costs have been rising across the country, with concerns over the monsoon and the impact of El Niño adding to the pressure.

At the same time, when a factory operates below capacity, the cost of converting the raw material into ethanol also rises on a per-litre basis.

Singh believes ethanol prices will have to reflect these higher costs. “A calibrated increase is therefore both reasonable and necessary to protect plant viability and debt repayment capacity,” he said. He also wants India to eventually move towards a more predictable pricing system.

At present, ethanol prices are administratively fixed by the Cabinet Committee on Economic Affairs. Government data shows that oil marketing companies’ weighted average procurement cost for ethanol in Ethanol Supply Year 2025-26 is above ₹71 per litre, including GST and transportation costs.

The Centre, however, has maintained that the ethanol blending programme is “not intended to maximise OMC profits.” 

India’s ethanol push is also raising concerns over food security, as growing demand for maize could reduce land available for pulses and oilseeds and increase edible oil imports. At the same time, ethanol plants are facing opposition in several states over groundwater use and pollution, showing that future expansion will need to address both environmental concerns and local resistance. 

Vehicle owners are still worried about E20 

As India moves towards E25 and E85, one major challenge will be convincing consumers that higher ethanol blends are safe for their vehicles. Since the nationwide E20 rollout in April, protests have taken place in Delhi and other parts of the country over claims that ethanol can damage older engines and reduce mileage.

One demonstration in August drew crowds who cited around 200,000 petitions on the issue. The Ministry of Petroleum has rejected these concerns as “largely unfounded.”

The Society of Indian Automobile Manufacturers has said the actual impact on mileage is relatively small, at around 2-4%.

Tests by Indian Oil Corporation and the Automotive Research Association of India found no compatibility issues with vehicles using ethanol-blended fuel. However, many vehicle owners still remain unconvinced.

What does the industry want over the next five years? 

For Singh, the next five years should not simply be about setting bigger blending targets. His first priority is “ensuring equitable distribution.” He also wants the industry to focus on building consumer trust in the ethanol programme.

Moving to E25 is another priority, but Singh said it needs to happen “keeping everyone’s interests in mind, including the consumer.” 

Faster adoption of flex-fuel vehicles is also important if India wants E85 to succeed. The message from BIEPA is therefore somewhat different from the government’s bigger blending ambitions.

The government is looking at a blending rate of nearly 26% by 2030-31. But for independent ethanol producers, the bigger question is whether the growth created by the programme reaches more companies instead of remaining concentrated among a few.