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The government’s next ethanol push is expected to move beyond E20, but the higher blends are being linked specifically to flex-fuel vehicles rather than ordinary petrol cars.

Tarun Kapoor, Advisor to the Prime Minister’s Office, has said the focus after achieving 20 percent ethanol blending is on expanding flex-fuel vehicles and allowing ethanol content above 20 percent for vehicles designed to use it. He also said fuel availability at retail outlets will have to grow alongside the number of flex-fuel vehicles on the road.

That distinction is important. In July 2026, the government said it had taken no decision to raise the nationwide base petrol blend beyond E20. E85, which contains roughly 85 percent ethanol, has instead been introduced as a separate fuel for certified flex-fuel vehicles.

Ethanol blending rose from below 1.5 percent in 2013-14 to 20 percent in 2025-26. Government data projects ethanol procurement of more than 1,200 crore litres in 2025-26, while installed production capacity has expanded to about 2,000 crore litres.

Kapoor said production is now higher than the quantity required for the existing blending programme, creating a reason to develop additional uses for ethanol. Apart from transport, he referred to cooking and industrial applications.

For the auto sector, flex-fuel vehicles provide the clearest route to using much higher ethanol content without asking an E20-only car to run on fuel for which it was not designed.

The first steps have already been taken. E85 retailing began in June 2026 at 48 outlets operated by public-sector oil companies. The fuel was introduced at roughly Rs 20 per litre below conventional petrol, and the government has indicated a target of up to 5,000 E85 dispensing outlets by the end of 2027.

Maruti Suzuki has also launched the Wagon R Bioflex at Rs 7.24 lakh ex-showroom. The car is homologated for ethanol-petrol blends from E20 to E85, while Maruti says its engine has been engineered for compatibility up to E100. It costs about Rs 86,000 more than the equivalent Wagon R petrol manual.

The Wagon R shows both the potential and the current limitation of the plan. A flex-fuel car can adjust its engine controls to different ethanol concentrations, but the usefulness of that ability depends on higher-blend fuel being easy to find.

For consumers, the retail price of E85 cannot be viewed in isolation. Ethanol contains less energy per litre than petrol, so a lower pump price does not automatically guarantee a lower cost per kilometre. The real calculation will depend on the fuel efficiency achieved by individual flex-fuel models at different blends.

Automakers will need more flex-fuel models at prices that do not create a large entry premium. Fuel systems, seals, hoses, engine calibration and other ethanol-sensitive components also have to be designed and certified for the intended blend.

Oil companies face a different task. E85 needs its own storage, handling and dispensing network. Forty-eight launch outlets are enough to start a programme, but they are a small network for a fuel intended to support mass-market vehicles.

Ethanol producers gain an additional source of demand, which is relevant when capacity is running ahead of the E20 requirement. However, future expansion will also depend on feedstock availability, pricing and how much ethanol the transport sector can absorb without creating an uneconomic fuel chain.

For owners of existing petrol vehicles, the practical rule remains compatibility. An E20-certified vehicle does not become an E85 vehicle simply because higher-ethanol fuel reaches a nearby pump.

The government’s present direction appears to be a parallel flex-fuel pathway, with higher blends following compatible vehicles and dedicated fuel infrastructure rather than replacing E20 overnight.