Even as the automobile industry continues to push back against the government’s 20 per cent ethanol blending mandate—citing reduced fuel efficiency—the ethanol lobby is urging a further increase of 1–2 per cent, within what it calls the “tolerance level” of existing vehicles.
The Grain Ethanol Manufacturers’ Association (GEMA) has made the demand, arguing that more than half of the industry’s installed capacity remains idle.
“The grain-based ethanol industry is struggling, with only about 50 per cent of our total capacity being utilised. Raising the blend by just 2 per cent can help us achieve breakeven,” said CK Jain, president of GEMA.
Ethanol makers remain hopeful of a hike, particularly with “pressure from poll-bound Bihar”, a key maize-producing state, though automakers are in no rush.
Fuel efficiency drops by up to 6 per cent when moving from E0 to E20 petrol. “There is no consideration at present to raise the ethanol blend,” a senior auto industry executive told ET on condition of anonymity.
The government’s mandate for E20 fuel this fiscal—comprising 20 per cent ethanol and 80 per cent petrol—has faced a wave of criticism, especially on social media. Proponents argue that it boosts the farm economy, with about ₹40,000 crore paid to farmers over the past decade for ethanol-linked crops. Critics, however, say the blend reduces fuel economy.
Consumers have seen little direct benefit either, as the production cost of E20 fuel is higher, offering no price advantage at the pump, according to oil marketing companies.
In the first procurement cycle (C1) of the 2025–26 ethanol year (November–October), grain-based manufacturers offered 1,300 crore litres of ethanol to oil marketing companies, of which 750 crore litres were allocated.
The industry says excess capacity has been created after repeated government indications that ethanol blending will eventually rise to 25–30 per cent. “More capacity is still being added,” said Jain.
GEMA concedes that achieving 25–30 per cent blending immediately may not be feasible. “There is an urgent need to enhance blending up to the tolerance level of existing vehicles to provide relief to the grain ethanol industry,” Jain added.
The sector awaits Niti Aayog’s policy roadmap for higher blending targets. “The industry has already invested to meet enhanced requirements and is ready to collaborate with stakeholders on distribution infrastructure. However, timely policies and inter-ministerial coordination will be critical to sustain momentum,” Jain said.
Having achieved the 20 per cent blending target set for 2025, GEMA now wants India to emulate Brazil’s model of progressive blending, starting from E27 and moving towards 55 per cent under a flex-fuel regime.
