Auto Industry, Ethanol Makers Agree on Continuation of 20% Blending for Now

December 04, 2025

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by Prabhudatta Mishra (The Hindu Business Line) Auto industry, the government, and other stakeholders believe that flex fuel vehicles are the way forward: Vikram Gulati, country head and Executive Vice President (corporate affairs), Toyota Kirloskar Motor -- The automobile industry and ethanol producers have agreed to continue with the 20 per cent blending for now to allow the biofuel blending programme to stabilise. They, however, have sought permission for the commercial launch of flex-fuel vehicles with some push to encourage customers.

Addressing a team of visiting media at Triveni Engineering’s Sabitgarh sugar mill, Vikram Gulati, country head and Executive Vice President (corporate affairs), Toyota Kirloskar Motor, said that the automotive industry, the government, and other stakeholders (ethanol producers) in the ecosystem are in one voice that the way ahead is flex fuel vehicle.

“Globally, what is seen is after you reach the stage, let us say 20 per cent (ethanol blending with petrol) in case of India, you stabilise that and you use flexible vehicles,” Gulati said, adding that it is very difficult to go beyond E-20, because of the impact it may have on the vehicles, legacy vehicles, apart from other factors.

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“(Even) after meeting demand of alcohol and other industries of 330 crore litres, there will be unutilised capacity of over 450 crore litres,” Ballani (Deepak Ballani, Director General of Indian Sugar and Bio-Energy Manufacturers Association (ISMA)) said, and admitted that it would impact the financials of the distilleries. He also said that while the sugar mills have about 900 crore litres capacity, they have been allotted only 289 crore litres incycle 1 tender.

Depending on demand and supply, OMCs decide on the quantity of ethanol to purchase in a year, and revise it every quarter as per requirement.

In his presentation, the ISMA DG explained different ways to increase ethanol consumption, but did not specify any plan to increase the blending rate from the current E-20 level.

Ballani said, there could be a demand of 1,950-2,050 crore litre in addition to the current 1,300-1,350 crore litre, which will include 1,300-1,350 crore litre from ethanol blending with diesel. He added that Praj Industries has at an advanced stage of its trial of ethanol blended diesel.

Other sources from where more demand could be created are 250 crore litre from sugarcane-based ethanol export, 300-350 crore litres from flex fuel vehicles and 100 crore litres from 5 per cent blending with aviation fuel. READ MORE

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Excerpt from Fortune India: Toyota Kirloskar Motor proposes flex fuel vehicles as a solution to India's green transition and self-reliance, arguing they can run on domestically produced ethanol, unlike EVs that depend on imported batteries.

Even as the Central government looks at electric vehicles (EVs) as the country’s primary path towards green mobility transition, Japanese car major Toyota’s Indian joint venture - Toyota Kirloskar Motor (TKM) – says the national objective will be best served by flex fuel vehicles which runs on higher percentage of ethanol blended petrol as it meets the twin objectives of green transition and fuel self-reliance.

Addressing the media during a visit to the sugar and ethanol manufacturing complex of Triveni Engineering & Industries (TEIL) in Sabitgarh, UP on December 4, Vikram Gulati, country head & executive vice president, corporate affairs & governance, TKM said the suggestion to transition towards flex fuel vehicles is not to serve the interest of any specific industry or sector (automobile or bio-energy manufacturers) but of national interest as batteries, the key component of EV vehicles, are highly import dependent while flex fuel vehicles can run on up to 100% ethanol which can be produced entirely in India. It will help the country reduce dependence on imported oil and battery components, minimise supply chain uncertainties, and save foreign exchange, he explained.

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According to Gulati, India’s current policy environment and tax structure do not support the production or sale of flex fuel vehicles. The government should recognize the merit of ethanol and make it customer friendly through lower taxation, he said. “The customer should not pay higher tax than conventional ICE and running cost should have parity vis-à-vis base blend”, he said.

Speaking on the occasion, Deepak Ballani Director General, Indian Sugar and Bio Energy Manufacturers Association (ISMA) pointed out that based on the current uptake of ethanol, the country has an excess capacity to produce over 450 crore litres of ethanol. He suggested that tax incentives on higher ethanol blend compatible vehicles and differential pricing on fuel can create demand and hence a market for flex fuel vehicles in India. Establishment of ethanol pumps where sugar biorefineries can directly dispense E100 (100% ethanol) and carbon credits for biofuels, similar to a RenovaBio Policy in Brazil, are the policy and regulatory changes that can make a difference, Ballani said. READ MORE

Excerpt from Ommcom News: More than 1,000 crore litres of ethanol have been blended during the Ethanol Supply Year (ESY) 2024-25, thereby achieving an average blending of 19.24 per cent ethanol in petrol, while in October, ethanol blending of 19.97 per cent has been achieved, the Parliament was informed on Thursday.

The National Policy on Biofuels–2018, as amended in 2022, advanced the target of 20 per cent blending of ethanol in petrol from 2030 to Ethanol Supply Year 2025-26 (November 1, 2025 to October 31, 2026).

“Public Sector Oil Marketing Companies (OMCs) achieved the target of 10 per cent ethanol blending in petrol in June 2022 — five months ahead of the target during ESY 2021-22, 12.06 per cent in ESY 2022-23 and 14.60 per cent in ESY 2023-24,” Union Minister of State for Petroleum and Natural Gas, Suresh Gopi, told the Rajya Sabha in a written reply to a question.

In order to ensure consistent availability of feedstock and infrastructure for ethanol production in the country, the government has taken several steps which includes expansion of feedstock for ethanol production, administered price mechanism for Ethanol procurement under the Ethanol Blended Petrol (EBP) programme, lowered GST rate to 5 per cent for ethanol for EBP programme, and introduction of various ethanol Interest Subvention Schemes (EISS), among others.

The government also allocated 52 Lakh Metric Tonne (LMT) of surplus Food Corporation of India (FCI) rice for ethanol production, each for the ESY 2024-25 (from November 1, 2024 to October 31, 2025) and ESY 2025-26, along with diverting 40 LMT of sugar for ethanol production for the ESY 2024-25 and unrestricted production of ethanol from sugarcane juice/sugar syrup, B-Heavy Molasses as well as C-Heavy Molasses for ESY 2025-26.

The government had notified the “Pradhan Mantri JI-VAN (Jaiv Indhan- Vatavaran Anukool fasal awashesh Nivaran) Yojana 2019”, amended in 2024, with the objectives to establish advanced biofuels, including Sustainable Aviation Fuel projects in the country using lignocellulosic biomass and other renewable feedstocks.

“Under this scheme, the maximum financial assistance of Rs 150 crore per project for commercial scale projects and Rs 15 crore per project for demonstration scale projects have been prescribed,” the minister said. READ MORE