After E20, India should now focus on flex fuel: Toyota country head

Toyota's India head says the country should now push flex-fuel vehicles, calling for lower taxes and pricing support as E20 stabilises and higher blends prove impractical for legacy fleets

After mandating E20 fuel for vehicles across India, the country must now focus on promoting flex fuel -- which contains at least 85 per cent ethanol -- by reducing the effective tax on flex-fuel vehicles and ensuring that the fuel is priced lower than petrol at pumps across the country, Vikram Gulati, country head of Toyota Kirloskar Motor (TKM), said on Thursday.

 

Flex-fuel vehicles can operate on petrol as well as high-ethanol blends, typically up to 100 per cent ethanol (E100).

 

Currently, no company has launched a flex-fuel vehicle in India, as these models are more expensive than comparable petrol-run vehicles.

   

“With compensation cess going away on September 22 (due to GST rate rationalisation), there is difference in GST only on the basis of the size of the vehicles in India. Small cars (less than four meters in length) are at 18 per cent and large cars are at 40 per cent for all the technologies. Only battery electric vehicles continue to sit at five per cent slab. For all other clean energy technologies, there will have to be some mechanism that the government will have to think about so that it can create merit-based taxation for clean technologies,” he stated.

 

When asked if flex-fuel vehicles, or strong hybrid vehicles, or strong hybrid vehicles that can run on flex fuel should also be put in five per cent GST slab, he replied, “There are multiple options that the government can look at. It could be within the GST, or outside the GST... Some mechanism has to be found to treat clean technologies on the basis of merit.”

 

Basically, the effective tax rate on these vehicles must come down.

 

When a vehicle is run on E100, there is loss in fuel efficiency (mileage loss) because the energy density of ethanol is lower by 26-27 per cent.

 

“It is an additional disadvantage for flex fuel. Therefore, in Brazil, there is a law that states that ethanol would be 33 per cent less in terms of price as compared to their monofuel, which is E30 now,” he said, adding that India must also consider similar measures to boost flex fuel vehicles.

 

India mandated E20 fuel compatibility for all new petrol-powered vehicles starting in 2023. Gulati said that as India has stabilised at E20 fuel mandate, moving to blends like E27 or E30 is neither feasible nor necessary, and the focus should instead shift directly to flex-fuel vehicles.

 

He said that global experience shows that once a country stabilises at a certain blend -- E20 in India’s case -- the next step is to transition to flex-fuel vehicles.

 

“The automotive industry, the government and all other stakeholders, in one voice, are saying that the way ahead now is creating flex fuel and boosting flex fuel-run vehicles,” Gulati said.

 

He said the government has taken a calibrated approach to increasing the ethanol content in petrol.

 

Gulati noted that in 2021, the Automotive Research Association of India (ARAI) conducted pan-industry testing to assess the impact of E20 fuel on legacy vehicles, and the results showed that E20 would not affect the vehicles themselves.

 

In 2023, the government mandated that all new vehicles be E20-compatible, and in April 2025, the industry transitioned to Bharat Stage-VI (BS-VI) Phase-II emission norms.

 

Gulati explained that moving beyond E20 requires extensive technical evaluation.

 

“To introduce any higher blend of fuel, you will need to do a study,” he said, adding that it is difficult to go significantly beyond E20 because the impact on the existing fleet’s fuel efficiency must be considered.

 

While blends such as E25, E27 or E30 are theoretically possible, he said repeated development, testing and homologation of new vehicles for every new blend are impractical, and the large population of legacy vehicles on Indian roads cannot be ignored.