India’s fuel demand is on an upward trajectory, accompanied by a growing crude oil import bill. In 2021–22, the country imported crude oil worth USD 120 billion, meeting approximately 86 percent of its total requirement for petroleum products (PPAC). In response, the Government of India has sought to reduce this dependence on imported crude oil, identifying the promotion of biofuels—particularly ethanol blending with petrol—as a key strategy. According to NITI Aayog’s 2021 ethanol roadmap, this approach could yield annual foreign exchange savings of approximately USD 4 billion.

Since 2018, India has made notable progress in scaling up ethanol production and fuel blending. Ethanol supply for blending rose from under 2 billion litres in 2019–20 to approximately 4.1 billion litres in 2021–22, increasing the national average blending rate from 5 percent to 9.5 percent in the same period. The Government has now advanced its target of achieving 20 percent ethanol blending (E20) from 2029–30 to 2025–26.

Despite commendable strides towards the E20 mandate, critical challenges remain. Notably, the growing demand for ethanol in other sectors—such as the potable alcohol industry, which is expanding at a double-digit rate—poses significant competition. Similarly, the feed industry, particularly the poultry sector, is demonstrating robust growth, driving up demand for maize. Furthermore, climate variability is increasingly affecting crop yields, including paddy, maize, cotton, and chili. Against this backdrop, a key question arises: Can India ensure sufficient ethanol supply to its oil marketing companies to achieve the E20 target by 2025–26? Additional concerns include the availability of surplus crops for ethanol production and potential trade-offs with national food security. The report critically examines these questions, engaging with the broader global discourse on the food-versus-fuel debate.