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Informist, Wednesday, Mar. 25, 2026

 

Afra Abubacker

 

NEW DELHI – India does have surplus ethanol as its blending in petrol is capped at 20%, but the surplus is not as large as commonly cited, according to Abinash Verma, policy expert, and promoter and shareholder at Eastern India Biofuels Ltd. Verma suggests relying on flex-fuel vehicles for ethanol's geometric growth, rather than banking on the government to gradually raise its blending in petrol to 30%.

 

"We are talking about distillation capacity in the country of almost about 20 billion litres. Now, 20 billion litres will also include the requirements of the liquor sector, chemical sector, and others, which together account for almost 4 billion litres. So, that straight away reduces it to 16 billion litres (available for blending requirements)," Verma said.

 

The surplus capacity further shrinks when taking into account the demand from private oil companies and realistic distillery utilisation levels. The effective ethanol capacity available for blending purposes falls to about 14 billion litres, compared to the current blending demand of 12 billion litres.

 

He also said blending ethanol in diesel will only work for vehicles such as buses, which frequently refill fuel tanks. "The problem of ethanol with diesel is that it does not blend easily. With the help of a binding agent or additives, we can bind them together for about 24-36 hours," Verma said, adding that ethanol-diesel blending is not successfully running anywhere in the world.

 

Following are the edited excerpts from the interview:

 

Q. India currently faces excess ethanol production capacity. Did distilleries expand aggressively, overlooking the fact that demand is primarily policy-driven and limited?

 

A. I had always believed that there would be a lag between demand and supply in a growing sector. Demand and supply do not grow in tandem for some products. The production capacities we see today were created because of strong government incentives and policy support. But demand growth has stalled as ethanol blending in petrol has plateaued at 20%.

 

To expand demand, we must move directly towards flex-fuel vehicles, which can run on both E20 and higher ethanol blends such as E85 or E100. The sensor in the fuel line detects the ethanol-to-petrol ratio and optimises ignition timing and fuel injection automatically.

 

Developing vehicles that are compliant with E30 blend will become outdated, similar to how E10-calibrated vehicles turned dated when the base fuel became E20. Flex-fuel vehicles will ensure that ethanol demand grows geometrically as compared to arithmetical growth with E25 or E30 blends.

 

Secondly, the commonly cited production capacity figures might not be well researched. I am not very sure if the government has calculated 20 billion litres of capacity, considering 365 working days for grain-based distilleries and 270 working days for sugarcane-based distilleries. Distilleries that run on sugarcane-based feedstock cannot operate round the year, because the crop is seasonal. Even grain-based plants cannot run 365 days. There should be some maintenance and unplanned shutdowns.

 

Q. Can you elaborate further? Are the numbers inflated?

 

A. I would not call it inflated, but it is misunderstood. We are talking about the country having 20 billion litres of production capacity. This capacity also includes requirements from liquor, chemical, pharmaceutical, and perfume industries, which together consume around 4 billion litres. That reduces the capacities catering to ethanol blending requirements to 16 billion litres.

 

If you account for private oil companies' requirements, the effective capacity comes closer to 14 billion litres. Against this, the current demand for 20% blending is 12 billion litres. Therefore, the demand-supply gap is not very large.

 

Public oil marketing companies have already placed a tender for 10.5 billion litres of ethanol. Now, I believe that a tender for another 1.5 billion litres is expected any time.

 

Q. You suggested moving directly to flex-fuel vehicles to increase ethanol demand. But industry bodies have been urging the government to increase blending to 30% from 20% alongside the demand for incentives for flex-fuel vehicles.

 

A. Flex-fuel vehicles will take at least 12 months to roll out commercially. Companies like Toyota and Maruti already have prototypes. But for consumer acceptance, flex-fuel vehicles need tax incentives to make them cost-competitive with conventional petrol vehicles.

 

Securing favourable policies will take time. In the interim, we can gradually increase ethanol blending to 25% and use it in existing vehicles. Continuously shifting vehicle standards from E10 to E20 and then to E25 or E30 is cumbersome for manufacturers. It is better to move directly to flex-fuel vehicles.

 

Consumers think engines will seize if cars are not compliant with higher blends. Nothing of that sort has happened in the last four years since we have been using E10 in 2021-22. Then, we moved to E14, E16, E18, and E20. I don't think any manufacturer got complaint of engine failure because of the use of higher blends.

 

Ethanol has a lower calorific value, which reduces mileage. But it can be compensated if we can pass on the lower price for purer ethanol or higher-percentage ethanol compared to E20 base fuel. In Brazil, the base fuel is E30, which all petrol vehicles use. But you will also find pumps dispensing pure ethanol there. Prices are also different for both fuels.

 

Q. Since most vehicles in India are diesel-powered, what is the scope of ethanol blending in diesel?

 

A. The problem of ethanol with diesel is that it does not blend easily. With the help of a binding agent or additives we can bind them together for about 24-36 hours. After that, it separates. So, ethanol in diesel has still not succeeded anywhere in the world.

 

People have tried using ethanol blended diesel in buses because they run longer and refuelling cycles are frequent. But it cannot work in cars or other vehicles. Secondly, when we blend ethanol with petrol, the octane number improves, which is important for petrol. But for diesel, it is cetane, which ethanol cannot improve.

 

The government has been talking about blending isobutanol, which I am told can be made from ethanol. I am not sure about the commercial viability of it.

 

Q. How do you view the frequent changes in the government's feedstock policy, including the mandatory 40% ethanol production from rice sourced through the Food Corp. of India for grain-based distilleries?

 

A. Policy stability is essential. Shifting policies keep producers confused. The government initially promoted maize to support farmers, which worked well as maize prices improved significantly. Unlike paddy and wheat, the government does not procure maize. So, ethanol production from maize boosted its cultivation and improved prices.

 

The government is trying to diversify the feedstock basket. It is not discouraging any particular feedstock. It is trying to encourage a particular feedstock, and then once it grows, they withdraw from that position.

 

However, mandating ethanol production from FCI rice is not beneficial for the industry due to lower margins. The government is looking at ethanol as a way to dispose of the surplus FCI rice, and that is not sustainable in the long run. End

 

Edited by Deepshikha Bhardwaj

 

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