In a proposal to the transport ministry, it has said the move will help reduce pollution emitted by state road transport buses which consume a staggering 9 million kilolitres of diesel.
The proposal comes against the backdrop of the National Green Tribunal (NGT) ordering a ban on all diesel vehicles that are more than 10-year old in the national capital.
"Association of State Road Transport Undertakings has submitted a proposal to the Road Transport and Highways Ministry for facilitating dispensing outlets of bio-fuels, to begin with, in the cities of Delhi, Hyderabad, Bengaluru and Mumbai," ASRTU Executive Director PS Ananda Rao told PTI.
"The ethanol diesel blend proposed will be the first of its kind in the entire South East Asia," he said, adding that "the best tool to fight vehicular pollution is ethanol as it contains 35 per cent Oxygen that helps complete combustion of fuel and thus reduces harmful tailpipe emissions".
He said the share of road passenger traffic has increased in the country from 32 per cent in 1951 to over 90 per cent at present.
India consumes an estimated 68 million tonnes of diesel, of which road transport accounts for 64 per cent of the consumption.
The ASRTU move assume significance as in a step to improve ambient air quality, the National Green Tribunal on April 7 held that all diesel vehicles which are more than 10 years old will not be permitted to ply in Delhi.
Noting that diesel is prime source of air pollution in Delhi, the Tribunal had said the situation is so alarming that people have been even advised to leave Delhi due to adverse effects on health.
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