15 Dec 2025
India’s achievement of 20 percent ethanol blending in petrol (E20), realised five years ahead of the original 2030 target, marks a significant milestone in the country’s energy transition. The accomplishment reflects effective policy execution, strong inter-sectoral coordination, and sustained commitment from the sugar, bioenergy and automotive industries. More broadly, it underscores India’s resolve to advance self-reliance while pursuing cleaner and more sustainable energy pathways.
At the heart of this success lies the sugar industry, which has emerged as the backbone of India’s ethanol blending programme (EBP). Through substantial investments and operational scale-up, the sector has enabled the rapid expansion of ethanol availability and played a central role in meeting national blending targets.
Sugar industry’s leadership in the E20 transition
The sugar sector has invested more than ₹40,000 crore to establish ethanol production capacity exceeding 900 crore litres per annum, accounting for nearly 50 percent of the total ethanol required for E20 blending. By ensuring a reliable supply of sugarcane-based ethanol, the industry has provided critical support to the government’s blending objectives and the nationwide shift towards cleaner fuels.
The EBP has also strengthened the financial health of sugar mills, enabling timely payments to farmers and improving cash flows across the value chain. In addition, the ethanol ecosystem has generated large-scale rural employment and encouraged research and innovation aimed at improving crop yields. Collectively, these outcomes have positioned ethanol as a cornerstone of India’s evolving energy policy.
The need for a clear roadmap beyond E20
Despite the E20 milestone, challenges remain. Current ethanol demand for 20 percent blending stands at about 1,048 crore litres, while supply offers have reached 1,776 crore litres, equivalent to a potential blending level of around 32 percent. This surplus highlights both progress and a growing risk: nearly half of the installed ethanol capacity remains underutilised.
In the absence of clearly defined future blending targets, production infrastructure could face neglect, leading to idle capacities and renewed financial stress for mills. Such uncertainty may also reverse recent gains in farmer incomes and rural diversification, while discouraging investment in advanced biofuels, next-generation technologies and ethanol-linked research and development.
To sustain momentum and prevent stagnation, the sector requires a clearly articulated roadmap for higher blending levels, supported by parallel advancements in vehicle technology and fuel compatibility.
Ethanol at the centre of India’s energy strategy
Between 2014 and 2025, ethanol blending is estimated to have saved India approximately ₹1.4 lakh crore in foreign exchange and reduced carbon dioxide emissions by more than 70 million tonnes. With wider adoption of flex-fuel vehicles (FFVs) and higher ethanol blends, annual savings on crude oil imports could rise by ₹50,000–₹75,000 crore.
As a domestically produced fuel, ethanol aligns closely with India’s Net Zero by 2070 commitment and its broader low-carbon growth strategy. Its role extends beyond transportation, offering opportunities across sustainable aviation fuel, green chemicals and advanced bioenergy solutions.
A call for policy reform
A comprehensive National Ethanol Mobility Roadmap 2030 is essential to integrate the full ethanol ecosystem. Such a roadmap should address vehicle adaptation, scaling up second- and third-generation biofuels, and the development of sustainable aviation fuel and green chemical platforms.
Tax rationalisation is a critical enabler. Currently, flex-fuel vehicles and strong hybrid electric vehicles face a combined tax burden of 43 percent, comprising 28 percent GST and 15 percent cess. Reducing this to 5 percent would significantly improve their commercial viability, stimulate demand, and support domestic manufacturing. Similarly, higher ethanol blends such as E85 and E100 are taxed at 18 percent GST; lowering this to 5 percent would accelerate consumer adoption and position ethanol blends as a preferred fuel choice.
The road ahead
India’s clean energy transition cannot rely on a single solution. A coordinated roadmap encompassing higher ethanol blending, wider adoption of FFVs and strong hybrids, and sustained support for bioenergy innovation will deepen participation from domestic industries and farmers alike.
The E20 achievement has demonstrated what is possible when policy, industry and agriculture work in unison. The next imperative is to transform this milestone into a launchpad for long-term energy security, rural prosperity and a truly self-reliant, sustainable future.