What Happened
- The All-India Distillers Association (AIDA) chief stated that the industry holds a cumulative ethanol production capacity of 200 crore litres and advocated raising ethanol blending to 25% (E25) to address overcapacity.
- Accelerating flex-fuel vehicle (FFV) development was recommended as a complementary demand-side measure to absorb surplus ethanol production capacity.
- India achieved its E20 target (20% ethanol blending in petrol) ahead of the original 2030 deadline, as set under the amended National Policy on Biofuels, 2018.
- The call for E25 signals the industry's push to move beyond the current blending ceiling and create new demand channels through FFV adoption.
Static Topic Bridges
India's Ethanol Blending Programme (EBP)
India's Ethanol Blending Programme was launched to reduce dependence on crude oil imports and promote cleaner fuel. The National Policy on Biofuels, 2018 (amended in 2022) advanced the E20 target from 2030 to Ethanol Supply Year (ESY) 2025-26. India achieved 10% blending in June 2022 (five months ahead of schedule) and progressively reached 12.06% (ESY 2022-23), 14.60% (ESY 2023-24), and 17.98% (ESY 2024-25). E20 fuel is available at over 3,300 fuel stations across India.
- National Policy on Biofuels: 2018 (amended 2022)
- E20 target: ESY 2025-26 (advanced from 2030)
- E10 achieved: June 2022 (5 months early)
- Blending trajectory: 5% (2019) → 10% (2022) → ~18% (2025) → 20% (target)
- Feedstock: sugarcane juice, molasses, corn, damaged food grains, rice, agricultural residues
- GST on ethanol for EBP: reduced to 5%
- Estimated annual savings from E20: Rs 35,000 crore in import bill; displacement of 63 million barrels of gasoline
Connection to this news: With the E20 infrastructure and supply chain already in place, the distillers association's call for E25 represents the logical next step in India's biofuel roadmap, driven by the industry's excess production capacity of 200 crore litres.
Flex-Fuel Vehicles (FFVs) and Engine Compatibility
Flex-fuel vehicles are designed to run on any blend of petrol and ethanol, from E0 (pure petrol) to E85 or even E100 (pure ethanol). FFVs require modifications to fuel injection systems, engine control units, fuel lines, and fuel tank materials to handle higher ethanol concentrations, which are more corrosive and have lower calorific value than petrol. India launched the world's first BS6 Stage II electrified flex-fuel vehicle prototype (Toyota Innova Hycross) in 2023. Multiple automakers — Maruti Suzuki, Hyundai, Tata Motors, Mahindra — showcased FFV prototypes at the Bharat Mobility Global Expo 2025.
- FFVs can run on: E0 to E85/E100 ethanol blends
- World's first BS6 Stage II electrified FFV prototype: Toyota Innova Hycross (launched 2023, by then-Minister Nitin Gadkari)
- Maruti Suzuki FFV: expected production start late 2025, launch by March 2026
- Key challenge: limited high-ethanol fuel station infrastructure (only ~7,000 E20-compatible pumps as of 2025)
- Ethanol's lower calorific value means ~20-30% reduction in fuel efficiency compared to pure petrol
Connection to this news: The distillers association's emphasis on FFV development addresses the demand-side bottleneck — even if India produces enough ethanol for E25 or higher blending, vehicles must be capable of using it. FFV adoption creates a flexible demand base for surplus ethanol.
Energy Security and India's Crude Oil Import Dependence
India is the world's third-largest oil consumer and imports approximately 85% of its crude oil requirements, making it highly vulnerable to global oil price fluctuations and geopolitical supply disruptions. The government's ethanol blending programme is a key pillar of its energy security strategy, alongside the National Green Hydrogen Mission, expanded solar capacity, and diversification of crude oil sources. Every 1% increase in ethanol blending reduces crude oil imports by approximately 0.3 million tonnes per year.
- India's crude oil import dependence: ~85%
- India's rank as oil consumer: 3rd globally (after US and China)
- India's crude oil import bill (FY25): approximately USD 150-160 billion
- E20 potential savings: Rs 35,000 crore annually; 63 million barrels gasoline displaced
- Related policies: National Green Hydrogen Mission (2023), PM-KUSUM for solar, compressed biogas initiatives
Connection to this news: The push for E25 and FFVs would further reduce India's crude oil import dependence, with each additional 5% blending potentially saving an additional Rs 8,000-10,000 crore annually in foreign exchange outgo.
Key Facts & Data
- India's ethanol production capacity: 200 crore litres (AIDA)
- Current blending level: ~20% (E20 target achieved)
- Proposed next target: E25 (25% blending)
- E20 annual savings: Rs 35,000 crore; 63 million barrels of gasoline displaced
- E20 fuel stations: over 3,300 across India
- E20-compatible pumps: ~7,000 (as of 2025)
- India's crude oil import dependence: ~85%
- National Policy on Biofuels: 2018 (amended 2022)