Why India Must Step on the Gas with Ethanol
Context:
The ongoing war in West Asia involving Iran has triggered a new global oil shock.
With commercial vessels coming under attack and major trade routes disrupted, India’s strategic vulnerability is starkly highlighted, given that it imports nearly 90% of its crude oil requirements.
Consequently, experts are urging the government to use this crisis as an opportunity to aggressively "step on the gas" with its ethanol blending programme.
The Brazil Blueprint:
The current geopolitical situation closely mirrors the 1973 Arab-Israeli 'Yom Kippur' War, which originally prompted Brazil to launch its 'Proálcool' programme to reduce dependence on imported fossil fuels.
Brazil successfully mandated ethanol blending, eventually pioneering commercial flex-fuel vehicles in 2003 capable of running on 100% hydrous alcohol (E100) or a 30% ethanol-gasoline blend (Gasoline C).
India's Blending Progress:
India has achieved remarkable success in recent years, accelerating its average blending ratio in petrol from a mere 1.6% (38 crore litres) in 2013-14 to roughly 20% (E20) by 2024-25, hitting its targets well ahead of schedule.
Currently, the national ethanol production capacity is not a constraint, already exceeding 1,800 crore litres annually.
This is supported by India's surplus production of sugarcane, maize, and rice.
The Road Ahead and Policy Shifts:
Flex-Fuel Transition:
Because the internal combustion engine cannot be entirely replaced by electric vehicles (EVs) in the near term, the immediate focus must shift to flex-fuel technology.
The auto industry requires a strong policy push to manufacture E30 and E100 compatible vehicles and to provide conversion kits for older models.
Tax Rationalisation:
To incentivize consumer adoption, industry leaders suggest bringing all ethanol-blended fuels—whether E20, E30, or E100—under a unified and favourable Goods and Services Tax (GST) framework.
Feedstock Pricing:
The government supports the initiative by fixing ex-distillery prices differentially based on the feedstock.
For instance, ethanol produced from sugarcane juice/syrup, maize, and damaged grains fetches a higher price than that from C-heavy molasses, ensuring sugar mills are compensated and supply remains uninterrupted.