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Informist, Monday, Jun. 8, 2026

 

NEW DELHI – India's ethanol demand could surge nearly 117% to 29.63 billion litres by 2039-40 (Apr-Mar), if flex-fuel vehicle penetration scales to an ambitious 50% during the five years starting FY35, InCred Equities said. Last week, India rolled out a flex-fuel ecosystem – with stations dispensing E85, or 85% ethanol blended petrol, and vehicles that can run on ethanol blends ranging from E20 to E100.

 

Oil marketing companies are estimated to require about 13.65 billion litres of ethanol for dispensing E20 or standard petrol across the country during FY27. "The introduction of E85 fuel does not replace E20, but rather it creates an incremental demand layer on top of the existing blending ecosystem," Nitin Awasthi, research analyst, InCred Equities, said. Aswathi estimates an incremental demand of 20 million litres by FY27 and 3.89 billion litres of ethanol by FY40. 

 

"Our scenario analysis assumes 50% penetration of flex-fuel vehicles in new petrol demand by FY36F-40F, resulting in incremental ethanol demand of nearly 3.89 bln litres vs. a pure E20 pathway," he said. 

 

Based on 5% growth in petrol consumption, the brokerage expects ethanol demand to rise 2% to 16.04 billion litres by 2030 (Nov-Oct), as the E85 rollout will require more ethanol. By 2040, the brokerage expects ethanol demand to rise 21% to 29.63 billion litres if incremental flex-vehicle demand is 50% from 2035-40 (Nov-Oct). 

 

The brokerage expects major distilleries, which produce most ethanol from grain-based feedstocks, to benefit from the shift to E85. "We back grain-tilted, big-scale & profitable cos like BCL Inds., Gulshan Polyols, & TruAlt Bioenergy," InCred Equities said, adding that these players have superior feedstock procurement capabilities and balance sheets capable of funding the next phase of expansion.

 

"If E20 was the first part of India's ethanol movie, E85 has the potential to become the sequel. And sequels are usually the most profitable for those who own the theatre itself," Awasthi said.  End

 

Reported by Afra Abubacker

Edited by Avishek Dutta

 

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