Government Examining Policy Support To Accelerate E85 Fuel Adoption

India’s ethanol blending programme, which has already saved ₹1.84 lakh crore in foreign exchange and helped cut 909 lakh metric tonnes of carbon emissions, could soon get another boost.

The government is examining a policy framework to support faster and more affordable adoption of E85 fuel, a blend containing 85% ethanol and 15% petrol, Petroleum and Natural Gas Minister Hardeep Singh Puri said on Wednesday.

Speaking at the launch of Hero MotoCorp’s first flex-fuel motorcycles in New Delhi, Puri said the move marks a new phase in India’s push towards cleaner and more self-reliant mobility. The newly launched Splendor+ and HF Deluxe motorcycles can run on ethanol blends ranging from E20 to E85.

At 1:10 PM on Thursday, Hero MotoCorp’s shares were up 1.58% at ₹4917.40.

Why Is The Government Pushing E85 Fuel?

According to Puri, E85 fuel is expected to be significantly cheaper than conventional petrol. The government is studying supportive measures that could make higher ethanol blends more accessible to consumers.

India currently imports nearly 88.5% of its crude oil requirements, making the country vulnerable to global supply disruptions and price swings. Greater use of ethanol could help lower fuel imports while creating a new source of income for farmers.

Puri said even if just 1% of annual petrol vehicle sales shift to E85 in the 2026-27 ethanol supply year, it would generate demand for around 4 crore litres of ethanol. Such demand could channel nearly ₹160 crore directly to farmers while saving about ₹195 crore in foreign exchange.

What Does It Mean For Farmers And Consumers?

The minister highlighted that ethanol blending has already added ₹1.58 lakh crore to farmers’ earnings since the programme began in 2014-15. He said farmers are gradually becoming “Urjadatas” or energy providers, in addition to being food producers.

Studies cited by the ministry suggest that if E85 fuel is priced sufficiently below E20, consumers could recover the higher upfront cost of a flex-fuel vehicle in roughly three years through fuel savings.

GST Issue Under Discussion

Union Road Transport and Highways Minister Nitin Gadkari, who was also present at the event, said he has raised concerns over the 18% GST applicable on fuels with ethanol blending above 20%.

According to Gadkari, Finance Minister Nirmala Sitharaman has assured that the matter will be discussed with states in a future GST Council meeting. At present, E20 fuel attracts a GST rate of 5%.

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The government is also working on regulatory changes that would allow wider use of E85, E100 ethanol, biodiesel and hydrogen-based fuels, signalling a broader push towards alternative energy solutions in India’s transport sector.

Sources:

The Economic Times

PIB