Ethanol Blending in India: Analysis with Special Reference to National Policy on Biofuels, 2018

Introduction

Energy is the backbone of economic development, industrial growth, and modern transportation. India has witnessed a substantial increase in energy consumption due to rapid urbanisation, industrialisation, and the rising number of motor vehicles. The transport sector alone accounts for a major share of petroleum consumption, with nearly 98%¹ of its fuel requirements being met through fossil fuels. However, India’s dependence on imported crude oil, meeting nearly 85%² of its total oil demand, not only places a heavy burden on the national economy but also exposes the country to global oil price volatility and energy security concerns. Consequently, ensuring a stable, affordable, and environmentally sustainable fuel supply has become a significant policy objective for the Government of India.

In this context, biofuels have emerged as an important alternative source of energy. Biofuels are derived from renewable biomass resources and provide a strategic advantage to promote sustainable development.³ Among various biofuels, ethanol has gained particular significance because of its renewable nature and compatibility with conventional petrol engines. Ethanol (C₂H₅OH) is an organic compound produced primarily through the fermentation of sugars derived from agricultural feedstocks such as sugarcane, molasses, maize, damaged food grains, and other biomass. Apart from its industrial and pharmaceutical uses, ethanol serves as a cleaner transportation fuel due to its higher octane rating and oxygen content, which promote more efficient combustion and reduce harmful vehicular emissions.

Ethanol blending refers to the process of mixing ethanol with petrol in specified proportions before distribution and retail sale. Blends are commonly designated as E5, E10, or E20, where the numeral indicates the percentage of ethanol mixed with petrol. The Ethanol Blended Petrol (EBP) Programme aims to partially replace conventional petrol with domestically produced ethanol, thereby reducing fossil fuel consumption, lowering greenhouse gas emissions, supporting agricultural income, and improving national energy security. Internationally, countries such as Brazil, the United States, and Thailand have successfully adopted higher ethanol blends, demonstrating the viability of ethanol as an alternative transportation fuel.

Recognising these economic and environmental benefits, India has adopted an ambitious roadmap for ethanol blending. The National Policy on Biofuels, 2018 initially proposed achieving 20% ethanol blending (E20) by 2030.⁴ Subsequently, based on the recommendations of the Expert Committee constituted by NITI Aayog and the Ministry of Petroleum and Natural Gas, the Government, through the National Policy on Biofuels (Amendment), 2022, advanced this target to Ethanol Supply Year (ESY) 2025–2026.⁵ The roadmap envisages expansion of ethanol production through sugarcane and grain-based feedstocks, enhancement of distillery capacity, development of fuel infrastructure by Oil Marketing Companies, introduction of ethanol-compatible vehicles, and supportive regulatory reforms. Through coordinated implementation of these measures, India seeks to strengthen energy security, reduce dependence on imported petroleum, promote cleaner transportation, and encourage sustainable agricultural growth.

National Policy on Biofuels, 2018

India’s ethanol blending programme is governed by a comprehensive legal and policy framework that seeks to balance energy security, environmental sustainability, agricultural development, and industrial growth. The principal policy instrument is the National Policy on Biofuels, 2018, which defines bioethanol as ethanol produced from biomass such as sugar-containing materials, starch-containing materials, and cellulosic material.⁶ The Government of India promotes and encourages its blending with petrol under the Ethanol Blended Petrol (EBP) Programme.⁷

A notable strength of India’s ethanol policy is its integrated institutional approach.⁸ Multiple ministries, including the Ministry of Petroleum and Natural Gas, Ministry of Road Transport and Highways, Department of Food and Public Distribution, Ministry of Environment, Forest and Climate Change, and NITI Aayog, have been assigned clearly defined responsibilities. This coordinated governance model ensures that ethanol production, vehicle compatibility, environmental regulation, pricing, and fuel distribution evolve simultaneously rather than independently.

From an economic standpoint, the policy introduces several fiscal and institutional incentives intended to enhance private sector participation and investment.⁹ These include viability gap funding, financial assistance for second-generation bio-refineries, infrastructure support, concessional financing, and the proposal for establishing a National Biofuel Fund.¹⁰ Additionally, the policy permits automatic approval for 100% foreign direct investment¹¹ in biofuel technologies intended for domestic use, thereby encouraging technology transfer and private capital inflows. Such measures indicate the Government’s recognition that the commercial viability of advanced biofuels depends upon sustained policy support and investment facilitation.

From a constitutional perspective, the policy reinforces the environmental obligations embedded within the Indian constitutional framework. Although the policy itself is executive in nature and does not possess statutory force, its objectives advance the Directive Principle contained in Article 48A, which obligates the State to protect and improve the environment. Simultaneously, it complements the fundamental duty imposed upon citizens under Article 51A(g) to safeguard the natural environment. Furthermore, the Supreme Court’s expansive interpretation of Article 21 has consistently recognised environmental protection and sustainable development as integral components of the right to life. Consequently, the promotion of renewable biofuels contributes indirectly to the constitutional mandate of ensuring a clean and healthy environment.

Limitations of the National Policy on Biofuels, 2018

Despite these policy advancements, several challenges remain. The foremost concern is feedstock sustainability. India’s ethanol production is still heavily dependent on sugarcane, a crop that consumes substantial quantities of irrigation water. According to the report, sugarcane and paddy together account for nearly 70%¹² of the country’s irrigation water usage, making long-term dependence on sugarcane environmentally unsustainable. Although the policy promotes maize, damaged food grains, and second-generation (2G) biofuels, their contribution remains comparatively limited. Greater diversification of feedstocks is therefore necessary to balance energy production with water conservation.

Another limitation concerns infrastructure and vehicle compatibility. Existing vehicles were primarily designed for lower ethanol blends, requiring manufacturers to redesign engines and fuel systems for E20 compatibility. The rubber and plastic components used in gasoline vehicles are currently compatible only with E10 fuel.¹³ Oil Marketing Companies must simultaneously expand storage, transportation, and dispensing infrastructure to ensure nationwide availability of ethanol-blended fuel. The policy recognises these challenges and recommends a phased rollout beginning with universal E10 availability before transitioning to E20.

The continued possibility of diverting agricultural resources towards fuel production raises a major concern. Although the policy permits the use of surplus and damaged food grains for ethanol production under specified conditions, the potential tension between food security and fuel security cannot be entirely disregarded, particularly during periods of agricultural distress or supply shortages. The absence of clearly defined statutory safeguards governing such diversion may create future policy uncertainties.

The policy also exhibits a limited enforcement architecture. As an executive policy, it primarily relies upon incentives, institutional coordination, and market-based mechanisms rather than legally enforceable obligations. The absence of statutory compliance requirements, monitoring mechanisms, or penal provisions restricts its regulatory effectiveness and leaves implementation largely dependent upon executive discretion. From a legal governance perspective, this may reduce policy certainty and weaken accountability among implementing agencies.

The National Policy on Biofuels (Amendment), 2022

The National Policy on Biofuels (Amendment), 2022 significantly strengthened the regulatory framework established under the National Policy on Biofuels, 2018, by accelerating India’s transition towards cleaner and sustainable energy. The most notable amendment advanced the target of achieving 20% ethanol blending (E20) in petrol from 2030 to the Ethanol Supply Year (ESY) 2025–26,¹⁴ while retaining the indicative target of 5% biodiesel blending by 2030.¹⁵

The Amendment also expanded the scope of permissible feedstocks for ethanol production¹⁶ to include:

• Sugar syrup
• Damaged food grains
• Surplus food grains approved by the National Biofuel Coordination Committee (NBCC)
• Industrial waste and industrial waste off-gases
• Algae and seaweed
• Plastic waste
• Other renewable biomass

Further, it broadened the definition of advanced biofuels¹⁷ to include second-generation ethanol, bio-CNG, bio-methanol, bio-hydrogen, green diesel, dimethyl ether (DME), and algae-based third-generation biofuels.

Additionally, the Amendment liberalised feedstock imports for biodiesel production where domestic supplies are insufficient, introduced conditional provisions for biofuel exports, strengthened institutional coordination by expanding the composition of the National Biofuel Coordination Committee, and provided financial support for establishing first-generation ethanol distilleries. These amendments collectively enhance energy security, encourage technological innovation, promote waste-to-energy initiatives, and align India’s biofuel policy with its climate change and sustainable development commitments.

Current Status

India’s Ethanol Blended Petrol (EBP) Programme has witnessed significant progress over the last decade, making it one of the world’s fastest-growing biofuel initiatives. Ethanol blending increased from 1.53% in the Ethanol Supply Year (ESY) 2013–14 to approximately 15% in ESY 2023–24,¹⁸ reflecting a substantial expansion in domestic ethanol production, blending infrastructure, and feedstock diversification. According to the Ministry of Petroleum and Natural Gas, this progress has resulted in foreign exchange savings exceeding ₹1 lakh crore,¹⁹ a reduction of 544 lakh metric tonnes of carbon dioxide emissions,²⁰ and the substitution of 181 lakh metric tonnes of crude oil.²¹ Government data indicate that India achieved approximately 19.05%²² average ethanol blending during ESY 2024–25 (up to July 2025), with 19.93% blending recorded in July 2025,²³ demonstrating that the country is approaching the E20 target.

Conclusion

The Ethanol Blended Petrol (EBP) Programme represents a significant shift in India’s energy governance by integrating environmental sustainability, energy security, and agricultural development within a unified policy framework. Through the National Policy on Biofuels, 2018 and its 2022 Amendment, the Government has adopted an ambitious and coordinated approach to reducing dependence on imported petroleum while promoting renewable energy and supporting rural livelihoods. The steady increase in ethanol blending demonstrates that policy incentives, institutional coordination, and industry participation can collectively accelerate India’s transition towards cleaner transportation fuels.

Nevertheless, the long-term success of the programme depends upon addressing critical legal and policy challenges. Greater diversification of feedstocks, expansion of second-generation biofuels, and careful management of the food–fuel balance are essential to ensure environmental and economic sustainability. Equally important is the development of a stronger regulatory framework with clearly defined monitoring mechanisms, accountability measures, and statutory safeguards to enhance policy certainty and effective implementation. As India moves towards achieving the E20 target, ethanol blending should be viewed not merely as an energy initiative but as an instrument of sustainable development consistent with the constitutional principles of environmental protection and intergenerational equity. A balanced, scientifically informed, and legally robust biofuel regime will be indispensable for securing India’s long-term energy resilience and climate commitments.

Reference(S):

• Government of India, National Policy on Biofuels, 2018 (Ministry of Petroleum and Natural Gas)
• Government of India, National Policy on Biofuels-2018, Amendment, 2022 (Ministry of Petroleum and Natural Gas)
• Government of India, Roadmap for Ethanol Blending in India 2020-2025: Report of the Expert Committee (NITI Aayog and Ministry of Petroleum and Natural Gas, June 2021)
• Press Information Bureau, Government of India, “India’s Ethanol Push: A Path to Energy Security,” 23 October 2024, pib.gov.in, accessed 30 June 2026
• Press Information Bureau, Government of India, “Government Speeds Up Ethanol Blending With Expanded Production and Infrastructure,” 11 August 2025, pib.gov.in, accessed 30 June 2026