Government to Explore Policy Options for Promoting Affordable Adoption of E85 Fuel

India Examines Policy to Support Accelerated Adoption of E85 Fuel

The Indian government is considering a policy to support the accelerated adoption of E85 fuel, a blend of 85 percent ethanol and 15 percent petrol. Petroleum and Natural Gas Minister Hardeep Singh Puri announced the move on Wednesday, stating that the policy is being actively examined to make E85 fuel more affordable.

Addressing an event organized by Hero MotorCorp, Puri noted that the unveiling of India's first flex-fuel motorcycles, which can run on ethanol-blended fuels ranging from E20 to E85, marks a new chapter in India's energy history. He stated that E85 fuel will be substantially cheaper than normal fuel, making it an attractive option for consumers.

India, the largest manufacturer of two-wheeler vehicles in the world, is expected to generate significant demand for ethanol with the adoption of E85 fuel. Even if just 1 percent of E85 is adopted in the 2026-27 supply year, it is estimated that 4 crore litres of ethanol demand will be generated. This would have a positive impact on Indian farmers, who would benefit from the increased demand for ethanol.

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The Ministry of Road Transport and Highways has proposed amendments to vehicle emission rules to widen the scope for higher ethanol blends and alternative fuels. The draft changes to the Central Motor Vehicles Rules, 1989 aim to provide for wider use of fuels such as E85, E100, and B100 biodiesel, as well as hydrogen-CNG combinations.

India has already achieved 20 percent blending of ethanol with petrol, creating a cleaner-burning fuel that reduces reliance on imported crude oil and cuts carbon emissions. However, the Union road transport and highways minister, Nitin Gadkari, has raised concerns about the higher GST rate of 18 percent on fuel with ethanol blending of more than 20 percent.

Gadkari stated that he has discussed the issue with the finance minister, who has assured him that she will discuss the matter with state governments in the GST Council meeting. The current GST rate on E20 fuel is 5 percent.

In related news, the road transport and highways minister is exploring the option of building concrete roads.

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