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Informist, Friday, Dec. 5, 2025

By Afra Abubacker

NEW DELHI - Although electric vehicles play a major role in India's drive towards green mobility and help cut crude oil imports, they remain dependent on outsourced critical materials such as rare earths, Toyota Kirloskar Motor's Country Head and Executive Vice President (Corporate Affairs and Governance) Vikram Gulati said. In contrast, ethanol-powered flex-fuel vehicles rely on domestic feedstocks, indigenous technologies, and are free from geopolitical vulnerabilities, he added. 

"In fact, most of the (ethanol) plants, not only in India, but also abroad, are being set up by Indian companies like Praj (Industries)," Gulati said in an interaction with Informist. Unlike rare earths, Gulati said India has abundant surplus of feedstock, including rice, maize, and sugarcane for ethanol production, which would otherwise go to waste or require subsidised exports. 

Gulati stressed the need to evaluate all energy sources on carbon emissions in life cycle basis. He argued biofuels are cleaner than electric batteries when India's coal-heavy grid is taken into account. Citing a study from The Energy and Resources Institute, he noted that the carbon emission index of sugarcane-based ethanol is 14-16 grams of carboin dioxide per megajoule, which is the lowest in the world.

"Ethanol per se is carbon neutral, zero carbon," he said. However, emissions arise from upstream processes such as cultivation, processing, and transportation. By contrast, India's electricity mix is around 75% coal-fired. "There are transmission losses, and there are distribution losses. If you add that, the carbon intensity of electricity in India would be much higher, probably going close to 100 plus grams per megajoule," he said. This raises the life cycle emissions of electricity and electric vehicles.

Gulati said that the carbon footprint of ethanol can be further reduced by using second-generation and third-generation feedstocks, such as agricultural residues, municipal waste, and algae. While India has achieved 20% ethanol blending in petrol, Gulati said the country has barely tapped the full potential of biofuels.

"We are just scraping the surface," he said, noting that the country has not even explored the full potential of first-generation ethanol by increasing crop yields. "We are just starting on 2G ethanol. And people are now talking globally about 3G ethanol." The Indian Oil Corp. Ltd.'s plant in Panipat produces second-generation ethanol, but is yet to commercially scale it.

Gulati welcomed the government's latest draft of Corporate Average Fuel Efficiency, or CAFE, norms for recognising ethanol as a carbon neutral fuel. He said this corrects the longstanding gap where ethanol's lower life cycle emissions were not fully accounted for or credited. He said the earlier draft had undervalued ethanol's carbon neutrality, which inadvertently penalised original equipment manufacturers for investing in flex-fuel technologies.

However, commercialisation of flex-fuel vehicles will depend on tax rationalisation, he said. Despite their higher manufacturing costs, green technologies such as flex-fuel vehicles attract a GST of 28% and are classified as the same as conventional petrol vehicles. This increases the cost of ethanol-powered vehicles and reduces its appeal to customers.

"The manufacturing cost itself has gone up to around INR 70,000-INR 80,000 in case of flex-fuel vehicles and around INR 500,000 in case of electrified flex-fuel. So, that is INR 180,000 unintended additional tax on merit technology," Gulati said. Unless the government corrects the structural tax disincentives for clean flex-fuel vehicles, consumer adoption is unlikely to pick up, he added.  End

Edited by Akul Nishant Akhoury

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