The Centre is planning a nationwide policy push to enable the adoption of flex-fuel vehicles (FFVs) that can run on ethanol blends of up to E85 (85% ethanol and 15% petrol), as the West Asia conflict prompts India to explore ways to cut oil import dependence, according to two people aware of the development and a correspondence reviewed by Mint.
India’s current 20% ethanol blending mandate, introduced in 2025, had triggered public complaints over reduced mileage and concerns around engine performance.
The Union petroleum and natural gas ministry has called a meeting on Monday to deliberate on the issue. “During the meeting, a presentation will be made by the working group constituted for preparing the plan for the rollout of FFVs,” one of the people cited above said, requesting anonymity.
The working group, comprising experts from oil marketing companies, automobile makers and the government, will present its plan to top executives of state-run oil firms and representatives of the automobile industry lobby group Society of Indian Automobile Manufacturers (Siam), and officials from relevant ministries.
Global crude prices have remained volatile amid the conflict, briefly crossing $100 per barrel before easing following a ceasefire, with risks of another spike persisting.
Such a scenario poses a significant fiscal risk to India, considering it imports 90% of its oil requirements. A $1 per barrel increase for a year would add around ₹16,000 crore to the country’s import bill. India sourced oil worth $109.5 billion in FY26, according to the petroleum ministry’s Petroleum Planning & Analysis Cell (PPAC).
Recent disruptions in the Strait of Hormuz have further heightened concerns, with the ministry of ports, shipping, and waterways saying on Sunday that two vessels had to return to the Persian Gulf after reporting a firing incident while exiting the Strait.
With transport accounting for a bulk of petrol consumption, reducing dependence on fossil fuels in the mobility sector is seen as critical.
India’s automobile market recorded sales of over 12.59 million petrol vehicles in FY26, according to data from government portal Vahan. The petrol vehicles make up approximately 44% of the country’s total sales of 28.3 million vehicles, underscoring the scale of transition required.
However, the auto industry remains cautious about the rollout of flex-fuel vehicles.
“The auto industry’s qualms before launching flex fuel vehicles in India are about the lack of clarity on pricing of blended fuels, the uncertainty around distribution of the blended fuel at retail pumps, as well as about incentives for FFVs, since these vehicles are more costly to produce compared to other petrol vehicles,” said a person aware of flex fuel vehicle policy deliberations.
Queries sent to the ministries of petroleum and natural gas, heavy industries, and road transport, as well as IOCL, HPCL, BPCL, SIAM and major automakers, did not elicit a response till press time.
Globally, flex-fuel vehicles are used extensively in Brazil, where they were introduced in 2003. Today, they dominate new vehicle sales, with over 90% of cars and two-wheelers capable of running fully on ethanol, petrol, or a blend of both (in various proportions), supported by a strong sugarcane-based ethanol ecosystem.
In India, however, experts say that while flex-fuel vehicles are strategically important, rebuilding public trust will be key.
Sanjukta Subudhi, associate director of microbial biofuels & biochemicals at The Energy and Resources Institute (TERI), a New Delhi-based think tank, said that while tailpipe emissions of FFVs are lower than traditional petrol vehicles, further studies and quality safeguards may be required to rebuild public trust.
Ethanol surplus drives push
The push is also being driven by a surplus in domestic ethanol production, with capacity at 20 billion litres against demand of around 11 billion litres under the E20 programme.
Faced with surplus capacity, ethanol makers have been lobbying the government for higher blends in fuel as well as incentives for flex-fuel vehicles within days of the beginning of the West Asia war, Mint reported on 19 March.
Higher ethanol blending is the need of the hour, said C.K. Jain, president of the Grain Ethanol Manufacturers Association (GEMA), a lobby group covering more than 100 distilleries. “Twenty billion litres of ethanol has been produced, and another 2-3 billion litres will be produced by the end of this year. With this stockpile, it is possible to create a 40% ethanol blend in petrol,” he said.
While there is some energy loss in using higher blends of ethanol in fuel, there is no damage to the engine, Jain said. He added that since mileage of vehicles is reportedly falling due to the use of ethanol blends, consumers should get a price advantage on these blends.
According to S.S.V. Ramakumar, former director, R&D at Indian Oil, the move towards 20% ethanol blending of petrol was made after extensive testing and studies. He had told Mint on 19 March that about 10 billion litres of ethanol meets the 20% blending requirement, and the industry estimates 20 billion litres production in 2028.
So, progressing beyond 20% blending would require further tests and study to establish performance and component compatibility, he had said.
India’s ethanol blended petrol (EBP) programme began in 2003 to reduce oil imports and support farmers. After slow initial progress, it accelerated post-2014, achieving 10% blending in 2022 and targeting 20% (E20) by 2025–26, driven by policy support, ethanol price incentives, and expanded feedstocks like sugarcane and grains.
This January, petroleum minister Hardeep Singh Puri said that while reaching nearly 20% ethanol blending in the ethanol supply year 2025, India achieved foreign exchange savings of around $19.3 billion and direct payments exceeding $15 billion to farmers over the last decade. The ethanol supply year runs from 1 November to 31 October.