India Autos: Beyond E20 - What ethanol can and cannot deliver

Research evidence excerpt

India Autos: Beyond E20 - What ethanol can and cannot deliver

23 June 2026

India Autos

India crossed the 20 percent ethanol blending milestone in late 2025, making E20 its Venugopal Garre

+65 6326 7643 standard petrol grade about five years ahead of plan. The obvious next question is how

venugopal.garre@bernsteinsg.com much further this programme can go. Can it move to E25 or E27, and then beyond to flex-

fuel vehicles and E85? More importantly, is the incremental reduction in crude imports

Param Shah worth the cost and complexity of building an entirely new fuel value chain?

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param.shah@bernsteinsg.com

We separate our arguments into two halves. First half - stretching the blend from E20

toward E25 or E27 by 2030 is directionally sensible but hard. Over 80% of vehicles on

Indian roads are built for E10. Current E20 is already triggering mileage losses and fuel-

system complaints in legacy vehicles, and Govt. has only just assigned ARAI to study E25's

impact on existing fleet. The stretch is achievable for new vehicles, but for legacy fleet it is

conditional on retrofit kits scaling or legacy fleet turning over faster vs current scrap rates.

The second half - going beyond the blend wall (E25 / E30) by building a national flex-

fuel and E85 supply chain is a long industrial project whose payoff, when you model it, is

small, increasingly duplicated by technologies arriving anyway, and justified mainly by a

hedging logic that no longer fits India's moment. Battery costs are falling every year, EV

TCO is converging on petrol, and charging infrastructure build out + range improvement are

genuine advancements - the very alternatives that hedge oil dependence.

Feedstock is also a risk. India's ethanol comes primarily from sugarcane, molasses and