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Informist, Friday, Jan. 2, 2026

 

--Maruti Suzuki official: Need EV-like policy push to make flex-fuel viable

--Maruti Suzuki official: Policy uncertainty clouding flex-fuel invest plans

 

By Anand JC and Pallavi Singhal

 

NEW DELHI – Maruti Suzuki India Ltd. is undecided on making further investments in flex-fuel passenger vehicles, citing the absence of a clear government roadmap on how the segment will be developed into a viable option for consumers, a senior company official told Informist on condition of anonymity. Although the government in 2021 had encouraged automakers to develop flex-fuel-ready cars, it has since stayed mum on future plans, the official added. The policy uncertainty follows a public backlash over ethanol-blending measures taken earlier last year.

 

At present, fuel stations across India supply E20 petrol, which is a blend of 20% ethanol, a renewable biofuel derived from sugar and grains, and 80% petrol. Flex-fuel vehicles are engineered to operate on petrol, ethanol, or any blend of the two, including pure ethanol. Indian manufacturers are currently developing models compatible with blends ranging from E20 to E85 or E93 fuels.

 

Maruti Suzuki is expected to introduce a flex-fuel-compliant version of the WagonR this year. Other companies, including Hyundai Motor India Ltd., Mahindra & Mahindra Ltd., and Toyota Kirloskar Motor, showcased their flex-fuel-compatible vehicles at the Bharat Mobility Show in January 2025. Carmakers have invested about INR 2 billion in developing each flex-fuel model, according to a company executive.

 

"We have developed a car which is ready for launch, but there has been no communication from the government about future plans for the segment," the Maruti Suzuki official mentioned above said. At current cost structures, a flex-fuel vehicle would be priced about INR 80,000–INR 100,000 higher than a comparable internal combustion engine model, and would offer lower fuel efficiency and provide little operating-cost advantage over existing fuels, making additional investment in the segment increasingly difficult, the official added.

 

A petrol-powered WagonR delivers a city mileage of about 12–13 kilometres per litre, compared with around 16 kilometres per litre for its compressed natural gas-run variant. The E85-powered version is expected to give roughly 9-km-per-litre mileage, while the fuel itself is unlikely to be priced significantly lower than petrol.

 

"I am not very sure of further investment in flex-fuel vehicles, even if they are the best option after electric vehicles in India," the official said. Component suppliers have begun seeking clarity from automakers on specifications for flex-fuel parts, but those discussions lie in limbo amid the prevailing policy uncertainty. The lack of a clear policy has implications for other carmakers too, as they also have made sizeable investments in developing flex-fuel technologies.

 

The Centre has rolled out policies such as the Faster Adoption and Manufacturing of Electric Vehicles scheme and the PM Electric Drive Revolution in Innovative Vehicle Enhancement scheme to boost electric vehicle adoption across segments. A similar policy push for flex-fuel vehicles, particularly through taxation incentives, could help position them as a viable alternative, the official said.

 

The company official stressed that promoting flex-fuel vehicles is in public interest as these are powered by clean fuels and establishing allied infrastructure would be cheaper than for electric vehicles. Even though Maruti Suzuki has been fairly late to the electric vehicle party, it has maintained that it intends to offer cars across the various powertrain options.

 

Industry executives said automakers are also pushing for demand-side support such as tax parity and incentives for flex-fuel vehicles. Flex-fuel models currently attract goods and services tax rates in the range of 18–40%, compared with just 5% GST for electric vehicles, making the latter more attractive to buyers and leaving flex-fuel cars at a competitive disadvantage, they said. Without such support, industry insiders warn the ethanol programme risks hitting a wall as automakers may struggle to secure sustainable demand for flex-fuel cars.

THE ETHANOL STORY

 

The lack of demand-side support contrasts with the speed at which India has expanded ethanol blending in petrol. India raised ethanol blending in petrol to 20% in 2025 from 1.5% in 2014 and 15% in 2024, meeting its original 2030 target five years earlier. Unlike Brazil, which phased in higher ethanol blends over more than three decades, India compressed the transition to about a decade. The rapid increase in ethanol blending affected vehicles which were not designed for higher ethanol content, triggering backlash from owners of two-wheelers and car who reported lower fuel efficiency and corrosion of metal parts.

 

Companies acknowledged a 2–4% drop in mileage for older vehicles running on E20 fuel, but the government has maintained that higher blends were "a viable, non-disruptive transition towards meeting our (India's) commitments to a greener world," according to its statement in August last year. It also said ethanol blending by oil marketing companies resulted in cost savings of over INR 1.44 trillion between 2014-15 (Nov–Oct) and 2024-25 (Nov–Oct) as a replacement for petrol.

 

After the public outcry, the government opted to wait for the E20 mandate to stabilise before advancing further blending plans. Work is currently underway to establish standards for E30 fuel, though only at the molecular level for now. Trials on vehicles are expected to follow once a standard for the E30 fuel is established. "More than E30, policy is needed for E85 vehicles, as they are equipped to run any ethanol blend," the Maruti Suzuki official said.

 

Earlier last month, Toyota Kirloskar Motor's Country Head Vikram Gulati echoed this view, saying India should transition directly to flex-fuel vehicles instead of moving to higher blends such as E27 or E30. Since flex-fuel vehicles run on cleaner technologies, the government could consider offering incentives similar to those in Brazil, he had told Informist.

COST SIDE

 

Beyond policy clarity, economics on both the vehicle and fuel side will determine whether flex-fuel cars can gain traction, according to the Maruti Suzuki official. Internal price calculations by a leading automobile original equipment manufacturer, reviewed by Informist, show that ethanol-rich fuels could be meaningfully cheaper than petrol if tax structures and sourcing are optimised. Based on a Delhi price build-up, E20 petrol costs about INR 95.2 per litre as of Dec. 31, including excise duty, dealer margin and applicable value-added tax.

 

Using domestically produced ethanol, the average base price of E100 fuel works out to about INR 67 per litre. On that basis, a 95% ethanol blend with 5% GST (E95) would cost around INR 74.8 per litre, about 21% cheaper than  than E20 petrol or any mix of petrol with ethanol.  

 

The economics improve further if imported ethanol is factored in. Calculations using US-sourced ethanol, priced at about INR 53 per litre, show that even after adding excise duty--taking the cost to roughly INR 65 per litre--an E95 blend with 5% GST would be priced at about INR 69.9 per litre, or nearly 27% lower than petrol at current retail prices. Industry executives argue that such pricing could materially improve the case for flex-fuel vehicles if supported by stable policy and tax clarity.

 

Automakers may, therefore, push for greater flexibility on ethanol imports, particularly from the US, where ethanol is produced at scale from corn and other biomass. India already imports ethanol from the US for industrial, medical, and chemical uses, including pharmaceuticals and cosmetics, even though most imported ethanol is not currently used for fuel blending.

 

According to latest data from the US Energy Information Administration, US ethanol exports to India were about 3.54 million barrels between January and September 2025, averaging more than 393,000 barrels a month. Industry executives say imports for non-fuel use already play an indirect role in supporting India's blending programme by freeing up domestically produced ethanol for petrol blending, and could assume greater significance if flex-fuel vehicle adoption gathers pace.

 

Meanwhile, India's sugar sector has also been seen supporting the flex-fuel ecosystem, driven largely by surplus ethanol production capacity. "Policies have to have a long-term view for promoting green mobility," Ravi Gupta, executive director of Shree Renuka Sugars Ltd. had recently told Informist in an interview. "Given surplus ethanol availability, flex-fuel vehicles are the right strategy for India, we have the technology for flex-fuel vehicles."  End

 

Edited by Tanima Banerjee

 

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