West Asia War Impact: Indian Ethanol Makers Want Higher Blending In Petrol
The West Asia war has brought India’s ethanol blending programme back into focus. Amid the geopolitical tensions, Ethanol makers are now urging the government to accelerate higher blending and use a massive surplus to create a strong domestic energy alternative, thereby reducing dependence on oil imports. India is now one of the largest importers of crude oil. The global oil volatility and disruptions in the supply chain has in a way, necessitated the country to strengthen its indigenous fuel alternatives.
Mint reports that the All India Distillers Association (Aida) has already sought incentives for flex-fuel vehicles (FFVs), through a letter to the petroleum and natural gas ministry. This reportedly occurred on March 3, 2026- days after the war broke out. FFVs run on high Ethanol blends and their acceptance will lead to higher procurement of ethanol by oil marketing companies (OMCs).
Interestingly, this push comes at a time when Ethanol manufacturers are dealing with a massive surplus. The industry has reportedly produced around 20 billion litres of ethanol, while demand currently stands at roughly 11 billion litres under the existing blending programme- E20. The petrol sold through all bunks in the country has 20% Ethanol content in it.
Due to the surplus, distilleries are now operating at just 25–30% capacity and the same is causing significant financial stress to manufacturers. Since the distribution systems are largely in place, moving to higher blends, according to industry leaders, is structurally feasible.
Previously, we had seen Samir Somaiya, the Chairman & Managing Director of Godavari Biorefineries Limited (GBL), welcoming the government’s E20 directive and clarifying that it is even possible to explore higher blends, even E50 (50% Ethanol). With E20 as the national baseline, E50, according to him, is definitely achievable. He had also talked about the ‘urgent need’ to enable Flex Fuel Vehicles (FFVs) in India by providing them with policy support’
The war seems to have , in a way, given Ethanol makers the best opportunity to put more pressure on authorities, to increase blending.
India relies heavily on crude oil imports for its fuel needs. Roughly 90% of its crude oil procurement comes from imports. It is thus highly vulnerable to global supply disruptions- exactly what the war has brought about. If the conflicts make the crude oil price shoot up, our import bills will also see a huge spike. The end consumer will see petrol and diesel prices go up.
The Ethanol blending program has already delivered reassuring results. It has helped the country save billions in foreign exchange and also contributed to increasing farmers’ income. So, a higher blending program may seem interesting.
It would, however, need careful planning. Policymakers will need to balance energy security goals with consumer expectations, industry readiness, and environmental considerations.
India’s E20 target was achieved before the proposed timeline. It was originally slated for a 2030 completion, but was achieved in 2025- 5 years ahead of the same. The nation now sells only E20 (20% Ethanol blended) petrol. This move was aimed at reducing oil imports and strengthening energy security. However, it has not been without controversy.
Some users have reported lower fuel efficiency, even as the government maintains that E20 would not cause any major mechanical problems, nor would it affect engine health. The debate continues. Higher blending levels will surely raise concerns about engine compatibility and long-term performance. It wouldn’t be easy to convince vehicle owners on these.