India's ethanol moment has arrived — and the industry says it's ready for more

India crossed a quiet but historic milestone this week. From April 1, 2026, all petrol sold across India must contain up to 20% ethanol and meet a minimum Research Octane Number of 95 under Bureau of Indian Standards norms. It is the culmination of a policy journey that began in 2018 — and according to the ethanol industry, it is only the beginning.

Kushal Mittal, Vice President of the All India Distillers' Association (AIDA), told ET Now that India is not just ready for E20 — it has the capacity and raw material to go significantly further. "The overall requirement is about 1,200 crore litres of ethanol annually and the current capacity is close to 2,000 crore litres," he said. "The industry is more than ready for the next phase."

Five years early and still oversupplied

The speed of India's ethanol blending programme has been remarkable. The government advanced the 20% ethanol blending target to 2025–26 from the original 2030 deadline after achieving 10% blending in June 2022, five months ahead of schedule.

Mittal credited a clear government policy framework as the engine of this acceleration. "The government came up with a very clear policy in 2018 and the industry heavily invested with a lot of enthusiasm," he said. The result has been a triple win — rising farmer incomes, new rural jobs, and meaningful crop diversification across India.

Since 2014–15, India has saved more than ₹1.40 lakh crore in foreign exchange through petrol substitution with ethanol, and the shift to E20 alone helped save around $5 billion last year while adding approximately $4.6 billion to farmers' incomes.

A strategic buffer against the Middle East crisis

The timing of E20's nationwide rollout could hardly be more consequential. With the Strait of Hormuz under threat and global oil prices surging past $100 per barrel, India's ethanol surplus is looking less like an agricultural policy win and more like a strategic energy asset.

India imports around 90% of its crude oil needs and 50% of its natural gas requirements Al Jazeera — a vulnerability that has been thrown into sharp relief by the current Middle East conflict. Mittal was direct about ethanol's role as a buffer: "Ethanol is a perfectly good fuel with high energy and very low emissions. India is sitting on a very strategic position where we have abundance of raw material and abundance of production capacity."

He went further, suggesting ethanol could substitute LNG for cooking purposes — a move already underway in several countries globally — noting that in-home emissions from burning ethanol are actually lower than from gas, and that India's distribution infrastructure is already largely in place.

What comes next: Phase two of India's bioenergy ambition

With E20 now the law of the land, AIDA is pushing for a formal Phase Two policy framework to put India's surplus ethanol capacity to work across new sectors. The targets Mittal outlined are ambitious: Sustainable Aviation Fuel (SAF), flex fuel vehicles that can run on higher ethanol blends, further increases beyond 20% blending, and cooking gas substitution.

E20 fuel reduces carbon emissions by nearly 30% compared to E10, and ethanol's higher octane rating also improves engine performance, especially in modern high-compression engines. prometheanaction A lifecycle emissions study by NITI Aayog found that ethanol derived from sugarcane and maize cuts greenhouse gas emissions by roughly 65% and 50% respectively, compared to pure petrol.

For motorists, most vehicles manufactured in India from 2023 onward have been calibrated to operate on E20 fuel, though older vehicles may experience a marginal reduction in fuel efficiency of 3 to 7 percent.

The industry's message to New Delhi is unambiguous: the raw material is ready, the production capacity exists, and the geopolitical case for energy independence has never been stronger. The only thing the ethanol sector is now waiting for is a Phase Two policy to match its Phase One ambition.