How govt's E85, E100 push tests India's ethanol supply and storage limits

India is preparing the ground for E85 and E100 fuels, but moving beyond E20 will depend on whether the country can produce enough ethanol, store it safely, and distribute it efficiently at scale

The government has proposed bringing E85 and E100 fuels under the Central Motor Vehicles Rules, allowing testing and evaluation of vehicles designed for higher ethanol blends. The proposal goes beyond policy discussion as industry experts say the test lies in whether the country’s ethanol supply chain can expand beyond the limits of the current E20 programme.

 

Unlike E20, which could largely be integrated into the existing fuel system, higher ethanol blends require changes across production, storage, transport, retail infrastructure, and vehicle technology – all at the same time.

 

At the core of the transition are three linked questions: Can India produce enough ethanol beyond seasonal supply? Can it store and handle it safely across the fuel network? Can it distribute it efficiently to where compatible vehicles exist?

 

 

How much ethanol India produces?

 

India’s ethanol production capacity has expanded sharply over the past few years, supported by interest subvention schemes, blending targets, and grain diversification policies.

 

Installed capacity is now estimated at around 20–21 billion litres annually, while current E20 demand is roughly 10–12 billion litres, according to data shared by the government in Rajya Sabha in October 2024. On paper, this suggests there is room to move beyond E20.

 

“The rollout of E85 and E100 will be gradual in terms of fuel dispensing as well as vehicle fleet replacement,” said Akshay Modi, managing director at grain-based ethanol producer Modi Biotech Pvt Ltd.

 

“India’s current capacity can support blending levels to the tune of 30 per cent. Therefore,  there is already sufficient capacity of ethanol production for the next few years as the policy gets implemented and the immediate move beyond E20 is not constrained by production capacity,” he added.

 

What about production capacity for E85 or E100 fuels?

 

A transition towards E85 could raise annual ethanol demand to 35–45 billion litres, according to estimates shared by the CK Jain, president of the Grain Ethanol Manufacturers Association (GEMA). That would require a three- to four-fold increase in dependable supply.

 

According to Jain, India has too much ethanol capacity and not enough of the right kind. “Distilleries are running at 25–30 per cent capacity in many cases. On the surface, there is no supply problem for E85. But future growth will depend on feedstock diversification and year-round availability,” he said.

 

The problem is not just capacity. It is the structure of that capacity. Much of India’s current ethanol production still depends on molasses, which is seasonal and tied to sugar cycles. 

 

Experts say higher blending will require more grain-based ethanol from maize and surplus rice, alongside large-scale second-generation (2G) ethanol produced from agricultural residue.

 

“In practical terms, India may need an additional 15–25 billion litres of dependable capacity, implying fresh investments of roughly ₹1.5–2 lakh crore, especially considering the higher capital intensity of 2G plants,” Jain said.

 

Ankur Jain, managing director at Ankur Scientific which develops bioenergy and waste-to-energy systems, said the demand escalation becomes difficult to sustain through conventional feedstocks alone.

 

“India has reached E20, and for E20 the production capacity has reached approximately 17,000 crore litres, coming from maize, broken rice and molasses,” he said. “However, when we begin to consider higher blends such as E85 or E100, the scale of demand rises sharply, approximately four times for E85 and five times for E100."

 

That raises pressure on both agriculture and water resources. Meeting large-scale demand through sugarcane and paddy could intensify the long-running “food versus fuel” debate, while also increasing stress on water-intensive crop regions.

 

“This is where the conversation must shift meaningfully towards second-generation ethanol, which is produced from waste,” Ankur Jain said. “Without scaling 2G ethanol in a significant way, achieving E85 or E100 targets in a sustainable and balanced manner will remain a considerable challenge."

 

Ishita Bansal, co-founder and chief operating officer at e-waste management firm Plannex Recycling, estimated that India may need investments of ₹50,000–70,000 crore and beyond over the next five years to build advanced biorefineries capable of converting agricultural residue into high-blend ethanol fuel.

 

Storage and logistics: The hidden infrastructure problem

 

If supply is the first hurdle, storage and logistics may become the least visible, but most disruptive, challenge. 

The chart shows how higher ethanol blends could strain India’s supply and fuel infrastructure system [Credit - Compiled and visualised by Akshita Singh]

 

Ethanol is hygroscopic, meaning it absorbs water easily, and is also more corrosive than petrol. As ethanol concentration rises, conventional fuel infrastructure becomes increasingly incompatible.

 

“The challenge is often underestimated because it is invisible to the consumer,” Bansal said.

 

Industry experts say the infrastructure used for E20 cannot simply be scaled up for E85 or E100.

 

“The same petroleum infrastructure can, to a large extent, be used for E20,” said Ankur Jain. “However, when moving to E85 or E100, we are essentially dealing with standalone ethanol. Existing petrol dispensing units cannot be used and will have to be changed, as they are prone to corrosion. Similarly, current storage units at petrol bunks cannot be used and will need replacement."

 

The impact stretches across the fuel chain, from refinery tankage and transport systems to retail dispensing infrastructure.

 

At the retail level, most of India’s more than 90,000 fuel stations are not designed for E85. Retrofitting a single outlet could cost ₹2–3 lakh, implying nationwide investments exceeding ₹2,000 crore, Bansal of Plannex Recycling estimated.

 

Oil marketing companies such as Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited are also expected to invest heavily in blending terminals, specialised logistics and ethanol-compatible systems.

 

“We need dedicated corrosion-resistant pipelines and specialised ‘dry’ storage terminals,” Bansal said, adding that oil marketing companies are already committing roughly ₹5,000 crore towards blending terminals and logistics infrastructure.

 

Yet not all experts believe the infrastructure challenge will become a hard bottleneck.

 

Modi described the shift as “an evolutionary shift, not a disruptive one”. “Think of the CNG story. This is similar but relatively easier than that as we’re talking about piggybacking on the existing petrol infrastructure,” he said.

 

Still, even supporters of a phased rollout acknowledge that infrastructure upgrades will require a multi-year investment cycle closely tied to vehicle readiness and fuel availability.

 

Can E20 and E85 evolve together?

 

The transition itself is unlikely to happen in a neat sequence where E20 is fully stabilised before E85 or E100 emerge.

 

Instead, industry experts increasingly expect a multi-blend fuel ecosystem where E20 remains the mass-market fuel while higher blends expand gradually through flex-fuel vehicles.

 

“India can pursue both routes simultaneously, using E20/E30 as the foundation and gradually building the ecosystem needed for E85/E100,” Modi said.

 

Jain of GEMA said the future fuel system is unlikely to be uniform. “It is unlikely that all vehicles will shift to E85 or E100; instead, there will be a combination of fuels in use, some vehicles running on E20, others on mid-level blends like E50, and a growing segment on E85 or E100,” he said.

 

Bansal described this as a “twin-track” transition. “The E20 track should remain the mass-market baseline, while E85/E100 should emerge alongside flex-fuel vehicles,” she said. “Parallel transitions prevent a ‘chicken and egg’ scenario where automakers wait for fuel and fuel retailers wait for vehicles."

 

But even this phased approach depends on coordination between automakers, fuel retailers, distilleries and policymakers. Vehicle readiness itself remains an unresolved piece of the puzzle.

 

“E85 and E100 engines mandate a technology shift,” said Ankur Jain. “For E85, the technology is well known. For E100, it is not so much. Even for E85, the technology has to come from abroad and will have to get certified here in India, which will take its own time."

 

The real test

 

India’s E20 rollout demonstrated that ethanol blending can scale quickly with strong policy support and industry participation. But moving towards E85 and E100 is a fundamentally different transition.

 

It requires India to simultaneously expand dependable ethanol supply, diversify feedstocks beyond sugar-linked production, build ethanol-compatible storage and logistics systems, and align fuel availability with vehicle readiness.

 

The shift, therefore, is not merely about blending more ethanol into petrol.

 

It is about whether India can build an entirely new fuel ecosystem without creating supply shortages, infrastructure mismatches, or distribution bottlenecks along the way.