Industry lauds E20 milestone but red-flags the challenges ahead

Time of India

3 days ago

New Delhi: Industry leaders on Monday commended the collaborative efforts that have driven India close to achieving 20 per cent ethanol blending with petrol (E20) well ahead of schedule.
However, they also flagged consumer concerns regarding E20-compliant vehicles, particularly potential mileage drops and its corrosive nature, and assessed the gaps in industry's readiness to move towards higher ethanol blends.
At the World Biofuel Day 2025 conference organised by the Society of Indian Automobile Manufacturers (SIAM), Rajnath Ram, Adviser (Energy) at NITI Aayog, said no abnormal wear and tear has been observed in Indian vehicles running on
E20 fuel
for up to 1 lakh kilometres.
However, he acknowledged a drop in fuel efficiency when moving from E10 to E20 at about 2-3 per cent in newer vehicles and up to 6 per cent in older models. 'These are aspects the industry, stakeholders, and relevant government agencies need to jointly address to ensure the benefits are passed on to consumers,' he noted.
On material compatibility, Ram said while BIS standards mandate the use of corrosion-free materials, low-cost gaskets or rubber replacements may be required in some older vehicles.
Puneet Anand, AVP & Vertical Head, Hyundai Motor India said when an R&D engineer designs a car, there is always some level of tolerance or safety net built into it. However, to ease concerns about using cars or two-wheelers manufactured before 2023, the industry has requested the Centre to make available protection grade of fuel, particularly for older vehicles. 'Consultations on this are ongoing,' he said.
E20-ready models, equipped with upgraded fuel system components, have been available since April 2023. It is a milestone in a journey that started with just 1.5 per cent blending in 2003, advanced to 10 per cent in 2022, and is now poised to hit the 20 per cent target five years ahead of the 2030 deadline.
According to Harjeet Singh, Senior Technical Advisor at Hero MotoCorp, the two-wheeler segment, accounting for over 75 per cent of India's vehicular population and nearly two-thirds of its gasoline use, will be central to the fuel transition. These markets, especially in rural and semi-rural areas, require a robust distribution network, trained mechanics, and consumer education to drive adoption.
He said the shift goes beyond fuel chemistry, demanding re-engineering of fuel systems, hoses, and gaskets, along with engine remapping for optimal performance.
Planning and roadmap beyond E20
Anand emphasised that moving beyond E20 will require nuanced planning. On the technical side, this means calibrating engines for cold starts, managing vapour pressure, ensuring material compatibility, and maintaining onboard diagnostic accuracy- challenges he said are solvable, with trials already underway.
Equally important, he added, are ecosystem enablers such as steady ethanol supply, clear pricing and taxation policies, investment in distilleries and logistics, and standardised fuel dispensing and labelling norms.
Mayank Goel, Head of Supply- Fuels at Shell India, also highlighted the need for a clear and definitive roadmap for oil and gas companies to plan ahead and channel investments into the right areas.
OEMs are also seeking clarity on the end target for ethanol blending, whether it will be capped at E30, E85, or any other level, to plan their product and technology roadmaps accordingly.
An industry veteran questioned the logic of higher blended fuel being priced at par with regular petrol, urging the government to rationalise pricing and offer supply-side incentives to spur investment in flex-fuel technology. Without such measures, he warned, consumers might favour electric vehicles (EVs) over reinvesting in ICE options.
The veteran also stressed the need for dual fuel options at retail outlets, recommending both E10 and E20 blends to support the existing vehicle fleet and ease consumer transition.
Moving over 1G
India's ethanol blending progress has so far been driven largely by first-generation (1G) ethanol derived from sugarcane, beehive molasses, and surplus grains.
Singh of Hero MotoCorp pointed out that the next phase would require a transition to advanced biofuels sourced from non-food biomass such as agricultural residue, forestry waste, used cooking oil, algae, and other sustainable feedstocks.
'Advanced biofuels are crucial for India because they provide a sustainable pathway without triggering the food-versus-fuel debate,' he emphasised.
Ashim Sharma, Senior Partner & Group Head, Nomura Research Institute (NRI) referred to the opportunities and challenges of diversification into second-, third-, and fourth-generation (2G, 3G, 4G) biofuels.
In the flex-fuel era, he said, ensuring a steady supply of compliant vehicles and encouraging consumer adoption would crucial through measures such as differential pricing for blends beyond E27, fiscal support, and tax rationalisation. As higher ethanol blends could raise vehicle costs due to component upgrades, Sharma stressed the need for government incentives to offset this impact.
Insiders noted the complexity in doing so, due to the involvement of multiple agencies, including the GST Council, Ministry of Agriculture, the Ministry of Petroleum and Natural Gas, amongst others.
The beginning
While India's ethanol blending journey began in 2003, the real acceleration came after the Centre notified the National Policy on Biofuels in 2018. It
promotes multiple feedstocks for ethanol production, including 1G and 2G sources such as sugarcane juice, sugar beet, sweet sorghum, corn, cassava, damaged food grains like wheat and broken rice, and even rotten potatoes.
On the pricing front, the Centre in September 2019 increased regulated prices for ethanol derived from B-heavy molasses, partial sugarcane juice, and 100% sugarcane juice. Additionally, GST on ethanol has been cut from 18 per cent to 5 per cent.
India's first 3G ethanol plant, set up by Indian Oil Corporation in Panipat, is expected to scale up operations, while in 4G ethanol, NTPC is partnering with Jakson Green to produce ethanol from flue gas. However, technology development remains in the nascent stage and still has a long way to go.