The Indian government has begun talks with automobile original equipment manufacturers (OEMs) to increase ethanol blending in petrol beyond twenty per cent, with the current E20 target set for October 2025.
Major OEMs such as Tata Motors, Mahindra and Mahindra, and Maruti Suzuki have raised concerns about high investment requirements and limited consumer interest. A draft report is being prepared by officials from the petroleum, transport, and agriculture ministries for cabinet review.
Industry executives said upgrading vehicles from E20 to higher blends like E40 or E45 could raise costs by two point five to four per cent due to modifications in engine and exhaust systems. Existing vehicles may operate on higher blends, but mileage could drop and maintenance rise.
OEMs are already investing around Rs 950 billion to boost capacity, and further mandates may overburden the sector amid global uncertainties and weak urban demand. Passenger vehicle sales grew just two per cent in FY25.
Availability of flex fuels across India remains a hurdle for commercial rollout. Automakers urged the government to balance ambition with practical timelines and support infrastructure expansion before enforcing new targets.
