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By:

Sagari Gupta

24 March 2026 at 2:16:04 pm

From Green Fuel to Strategic Fuel

India’s ethanol revolution will succeed only if its costs are shared more fairly. On June 13, Union Minister Nitin Gadkari approved regulations giving E100 fuel legal status in India. The move does more than add two new fuel grades to India’s pumps. It marks the evolution of ethanol from a green fuel and sugar-surplus solution into a strategic fuel designed to reduce India’s exposure to external energy shocks. For over a decade, the older version of the ethanol programme delivered real,...

From Green Fuel to Strategic Fuel

India’s ethanol revolution will succeed only if its costs are shared more fairly. On June 13, Union Minister Nitin Gadkari approved regulations giving E100 fuel legal status in India. The move does more than add two new fuel grades to India’s pumps. It marks the evolution of ethanol from a green fuel and sugar-surplus solution into a strategic fuel designed to reduce India’s exposure to external energy shocks. For over a decade, the older version of the ethanol programme delivered real, measurable gains. Union Minister for Petroleum and Natural Gas Hardeep Singh Puri said on June 4 that the ethanol blending programme has saved India Rs. 1.84 lakh crore in foreign exchange and added Rs. 1.58 lakh crore to farmers’ earnings since 2014-15, while substituting 302 lakh metric tonnes of crude oil and cutting 909 lakh metric tonnes of CO2 emissions. The new policy answers a harder question. India imports around 85 percent of its crude oil requirements. Tensions around the Strait of Hormuz, through which about a fifth of the world’s oil moves, keep reminding policymakers what that dependence costs. Gadkari has put India’s annual fossil fuel import bill at roughly Rs. 22 lakh crore, near $250 billion at current exchange rates. Every litre of ethanol that replaces imported crude is a small subtraction from that bill and a small addition to India’s room to manoeuvre when oil prices spike. That logic is sound. The fairness of the transition is a separate question. Uneven Costs Energy security is a public good: a steadier rupee, lower inflation and reduced reliance on oil exporters benefit the entire economy. Yet the costs are far less evenly shared. The immediate winners are sugar-producing states, distilleries and the government, which enjoys a lower import bill and greater diplomatic flexibility. Nor is the environmental case as straightforward as the carbon figures suggest. Producing a litre of sugarcane-based ethanol requires about 2,860 litres of water, according to NITI Aayog. Most ethanol comes from sugarcane and maize grown in Maharashtra, Uttar Pradesh and Punjab - states already overexploiting groundwater. Ethanol is also competing with food and feed. Maize prices have risen as distilleries compete with the poultry industry, while India has shifted from being a maize exporter to an importer. The Centre for Study of Science, Technology and Policy estimates that meeting ethanol targets by 2030 could require additional maize acreage equivalent to a quarter of India’s farmland. In Rajasthan’s Tibbi, farmers have already protested against a new ethanol plant. A cleaner path exists. Second-generation ethanol made from paddy straw, sugarcane bagasse and other crop waste does not compete with food or fresh water the same way first-generation ethanol does. India has a handful of 2G plants running, including one at Panipat, but high capital costs and slow technology adoption keep them marginal next to sugarcane and grain-based ethanol. E85 and E100 need flex-fuel vehicles built for higher ethanol shares. Maruti Suzuki and Hero MotoCorp have begun rolling out flex-fuel models, but as of April this year no automaker had a vehicle commercially available that ran on E85, and Maruti’s own flex-fuel prototype only appeared in June. Neither company has disclosed what the flex-fuel variants will cost against standard petrol models. The fuel itself is cheaper at the pump. Delhi’s first E85 station, opened on June 5 at Indian Oil’s Pusa Road outlet, priced the fuel at Rs. 82.12 a litre, about Rs. 20 below regular E20 petrol. But ethanol carries less energy than petrol, and E85 cuts mileage by 20 to 35 percent compared with petrol. A cheaper litre that takes you fewer kilometres is not automatically a cheaper kilometre. Gadkari has asked the finance ministry to cut GST on E85 from 18 percent to 5 percent, which would help close that gap. The GST Council has not decided yet, and its decision in the coming weeks will tell us whether the government means to share the cost of this transition or leave it with early adopters. There is a fiscal cost behind the consumer one. Oil marketing companies are set to pay farmers close to Rs. 40,000 crore in 2025 alone under the blending programme, on top of the subsidies and soft loans that prop up ethanol distilleries. Infrastructure tells a similar story. The government’s rollout plan covers Delhi-NCR and the Mumbai-Pune-Nagpur corridor first, with a target of 500 E85 outlets by December 2026 and 5,000 by the end of 2027. A household outside those corridors that buys a flex-fuel vehicle today pays for infrastructure it cannot yet use. This is where the comparison with E20 matters. The earlier blending programme spread its costs thinly across every petrol buyer in the country, through a few percentage points of ethanol nobody had to think about or pay extra for. E85 and E100 work differently. They ask a smaller group of early adopters to absorb a vehicle upgrade, a pricing gap and an infrastructure lag all at once, in exchange for a national benefit every taxpayer will eventually share. Fairer Transition None of this is an argument against E85 and E100. India needs to cut its dependence on imported crude, and ethanol is the most realistic domestic substitute on the table right now. The environmental costs of first-generation ethanol are real too. The question is who absorbs its costs, and what kind of ethanol pays for it. The transition can be made fairer in four ways: extend any GST cut on E85 to flex-fuel vehicles; link vehicle sales to the availability of E85 pumps; require automakers to disclose price premiums and real-world mileage; and shift more incentives towards second-generation ethanol that does not strain water tables or food supplies. For a decade, India’s ethanol programme delivered foreign-exchange savings and higher farm incomes without imposing visible costs on consumers or water-stressed regions. E85 and E100 change that equation. They turn a public good - energy security - into an upfront private cost borne first by households and farming regions, while the wider benefits are shared by the country as a whole. (The writer is an independent public policy researcher. Views personal.)

Gamble and the Challenge

Updated: Nov 18, 2024

Eknath Shinde

As Maharashtra eagerly anticipates the election results on November 23, one name dominates political discussions: Chief Minister Eknath Shinde. Known for his bold moves, Shinde has reshaped the state’s political dynamics in unprecedented ways. In June 2022, Shinde set the stage for upheaval when he, along with several MLAs, left for Surat, plunging the coalition government into crisis. Just days later, with the BJP’s support, he assumed the role of chief minister, marking a shift no one saw coming.


The Maharashtra Vikas Aghadi, a coalition formed in 2019 by Shiv Sena, Congress, and NCP, had governed Maharashtra until Shinde’s exit. The impact of this political drama on state politics cannot be understated, as Shinde’s departure led to the fall of the MVA government. Over the past two years, Shinde has defied expectations, run a successful government while demonstrating independence from the BJP—a scenario few anticipated. His political acumen has now positioned him as a rising figure in BJP’s inner circle, potentially posing a challenge to BJP stalwart Devendra Fadnavis.


For Shinde, this election marks a crucial turning point. His objective is clear: securing wins for as many of his candidates as possible, solidifying his position in Maharashtra’s political landscape. However, the real test lies beyond the election results. In a political era where party loyalty is fluid, Shinde’s task will be to retain the loyalty of the elected MLAs.


Shinde’s journey from auto-rickshaw driver to prominent Shiv Sena leader has endeared him to the people, especially in Thane. Known for his humble behavior, he has built strong connections across all levels, from party workers to local households. However, this simplicity has led some BJP leaders to underestimate him. Now, even his allies realize that Shinde’s strategic mind and influence extend far beyond appearances.


One of Shinde’s significant achievements has been implementing the ‘Ladki Bahin Yojana,’ an initiative originally from Madhya Pradesh’s BJP government, which gained immense popularity in Maharashtra. This move not only showcases his keen sense of public sentiment but also distances him from his allies by establishing his independent policy-making approach.


Despite his growing influence, Shinde faces a challenge from the grassroots Shiv Sainiks who view him as a “traitor” for breaking with the Uddhav Balasaheb Thackeray (UBT) faction. Recasting the narrative behind his decision to part ways with UBT will be essential if he hopes to gain widespread voter support.


Emphasizing his motivations and successes, particularly with initiatives like the ‘Ladki Bahin Yojana,’ may help him connect with skeptical constituents.


With solid connections at the local level and rapport with senior BJP leaders like Prime Minister Modi and Home Minister Amit Shah, Shinde’s influence is likely to endure. This election will ultimately test Shinde’s leadership, resilience, and ability to navigate Maharashtra’s intricate political landscape. As Maharashtra’s political future hangs in the balance, Shinde stands at the forefront, steering the state’s uncertain course with both determination and ambition.

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