News Capsule: Ethanol Demand Could Surge 117% by FY40 on Expansion of E85 Fuel
09-Jun-2026 11:12 AM
News Capsule: Ethanol Demand Could Surge 117% by FY40 on Expansion of E85 Fuel
★ According to a recent report, India's ethanol demand could rise to 29.63 billion litres by FY40, up nearly 117% from current levels, if flex-fuel vehicles account for 50% of new petrol vehicle sales during FY35-FY40.
★ India has recently launched an ecosystem for E85 fuel (85% ethanol-blended petrol) and flex-fuel vehicles capable of running on blends ranging from E20 to E100. E85 is not expected to replace E20; instead, it will create an additional layer of ethanol demand.
★ Oil marketing companies are expected to require around 13.65 billion litres of ethanol in FY27 to support E20 blending.
★ The rollout of E85 could generate an additional 20 million litres of ethanol demand in FY27 and nearly 3.89 billion litres by FY40.
★ Assuming petrol consumption grows at 5% annually, ethanol demand could increase to 16.04 billion litres by 2030 and further to 29.63 billion litres by 2040.
★ The report suggests that grain-based ethanol producers are likely to be the biggest beneficiaries, as significant capacity expansion will be required to meet the rising demand.
★ Widespread adoption of E85 could strengthen demand for ethanol feedstocks such as maize, broken rice, and other grains, potentially triggering a new wave of investment and capacity expansion across India's ethanol industry.