India Accelerates Ethanol Drive to Cut Fossil Fuel Dependence

India is set to hit the accelerator on its ethanol drive, laying the groundwork for a wider ethanol fuel network as it looks to cut down dependence on imported fossil fuels.

Under the plan, ethanol dispensing stations will begin appearing in several cities, with the network set for a sharp expansion over the next two years. Petroleum and natural gas minister Hardeep Singh Puri said that the rollout will start with 50-100 ethanol fuel stations across Delhi-NCR, Pune, Mumbai and Nagpur. The government aims to ramp this up to 500 stations by the end of 2026 and further to 5,000 by the close of 2027. The roadmap was unveiled on Thursday alongside the launch of India's first flex-fuel car by Maruti Suzuki, signalling a fresh push to put more ethanol at the pump and less imported fuel in the tank.

Ethanol station rollout gathers pace

Minister Puri said, "I think we are starting with about 50 to 100 (ethanol) dispensing stations in Delhi-NCR region, Pune, Mumbai, and Nagpur, etc. This 50-100 (ethanol) dispensing stations will hopefully go up to 500 towards the end of 2026.” According to the minister, wider adoption of ethanol-compatible vehicles could help cut India's dependence on imported fossil fuels. He said the country's fossil fuel import bill is around $120 billion and making Euro VI vehicles compatible with E100 fuel would contribute to reducing that burden.

Push for flex-fuel vehicles and farmer gains

Puri also highlighted the economic benefits that could come from increased use of flex fuel vehicles. He said that if half of all new two-wheelers and four-wheelers manufactured in the country are flex fuel-compliant, it could create additional ethanol demand of 311.8 crore litres and generate Rs 12,403 crore in extra income for farmers. The push for ethanol comes as India has already achieved 20% blending of ethanol with petrol, up from 1.5% in 2014. The minister said the programme has led to foreign exchange savings of Rs 1.84 lakh crore by replacing 302 lakh metric tonnes of crude oil.

New rules to widen alternative fuel options

Alongside the fuel infrastructure expansion, regulatory changes are also being proposed to support a wider range of alternative fuels. The Ministry of Road Transport and Highways has suggested amendments to the Central Motor Vehicles Rules, 1989 to allow broader use of higher ethanol blends and other fuel options. The proposed framework includes fuels such as E85, a petrol-ethanol blend containing 85% ethanol, and E100, which would enable vehicles to run on nearly pure ethanol. The draft rules also cover B100 biodiesel and hydrogen-CNG combinations, opening the door for flex-fuel and pure biofuel vehicles across multiple vehicle segments.

OMC losses and fuel supply concerns

Responding to a question on the impact of higher international energy prices on oil marketing companies, Puri said the companies continue to face significant losses while selling retail fuels at lower prices despite higher procurement costs. "They are still quite high...Rs 500-550 crore per day loss," he said. The minister also addressed concerns over energy supplies routed through the Strait of Hormuz, through which 60% of India's LPG and 90% of its crude oil imports travel. " In the 93 or 94 days that have elapsed (after the attack of the US and Israel on Iran on February 28), there has not been a single dry out anywhere. There has been no shortage," Puri claimed. He said there had been attempts by some individuals to create panic by spreading false reports of shortages despite uninterrupted supplies. Puri further stated that India is second only to Japan in terms of the lowest increase in fuel prices.