India ethanol industry seeks higher blending to boost demand, cut oil imports

By Axel Miller | 23 Mar 2026

India’s ethanol industry is pushing for a larger role in the country’s fuel mix (AI generated).

Summary

India’s ethanol producers have urged the government to consider higher blending levels beyond the current 20% target, as the sector looks to expand demand and reduce reliance on imported fossil fuels.

NEW DELHI, March 23, 2026 — India’s ethanol industry has called for an increase in fuel blending levels beyond the current 20% target, saying higher usage could help reduce crude oil imports and support domestic producers.

The All India Distillers' Association has approached policymakers with proposals to expand the role of ethanol in the country’s energy mix, according to industry participants.

India has rapidly scaled up ethanol production capacity in recent years under its ethanol blending programme, which aims to mix ethanol with petrol to cut emissions and lower dependence on imported oil.

Industry representatives said the expansion has created scope for additional demand, particularly as supply capabilities improve and more feedstock sources become available.

“Ethanol blending has been a success story, and there is potential to go beyond current levels in a calibrated manner,” an industry official said.

Exploring new applications

Apart from petrol blending, the industry has also suggested exploring wider uses of ethanol, including in public transport and alternative fuel applications, though such proposals remain at a preliminary stage.

Experts say any move toward higher blending would require vehicle compatibility, infrastructure upgrades and regulatory approvals.

India has already introduced vehicles compatible with E20 fuel, and automakers are working on flex-fuel technologies that can handle a wider range of ethanol blends.

Policy and infrastructure considerations

Government officials have not announced any plans to increase the blending mandate beyond 20%, and any such move would depend on technical feasibility, supply stability and economic considerations.

India currently relies heavily on crude oil imports, and policymakers have been promoting biofuels such as ethanol as part of a broader strategy to improve energy security and reduce carbon emissions.

Why this matters

Energy security: Higher ethanol use can help reduce dependence on imported crude oil.
Farmer support: Ethanol production supports sugar mills and agricultural supply chains.
Clean fuel transition: Biofuels play a role in lowering emissions from the transport sector.