Chasing Brazil’s biofuel dream: Can India drive on 100% ethanol?

Ford’s vision was radical for the time: farmers could grow their own corn and potatoes, ferment them and brew their own fuel to run tractors and cars. No dependence on oil.

But the idea did not materialize, for a number of reasons, including the wide availability of gasoline following the discovery of huge oil reserves in the US, as well as the formal introduction of prohibition in 1920, which dealt a blow to production of industrial ethanol (a form of alcohol). By the time Prohibition was repealed in 1933, the prospects of ethanol were effectively dead.

For four decades, cheap oil ruled the world. Until the Arab embargo of 1973 sparked a change in Brazil, ultimately leading to cars that can be fuelled entirely by ethanol.

Nearly half a century later, India is attempting something similar. One can debate if ethanol is a technology of the past and whether, instead of biofuels, India should double down on raising penetration of electric vehicles as China is doing. But, as the world grapples with another energy crisis, sparked by the ongoing war in West Asia, what if India were to follow in Brazil’s footsteps?

Ethanol is made by fermenting and distilling starches and sugars derived from various crops. India makes it using feedstocks such as sugarcane, maize and rice. In the initial years, about a decade ago, ethanol was encouraged as a route to divert excess sugar production. In 2018, India sought to achieve 20% ethanol blending in petrol by 2030 but reached the goal five years early.

The rapid pace of ethanol production, which has grown ten-fold over the past decade, helped to make on-time payments to sugarcane farmers a reality and rendered cane dues, once a politically charged topic, a relic of history. Importantly, it allowed India to replace a portion of imported crude oil with home-produced ethanol. In addition, higher ethanol production created an avenue for a surge in maize (corn) cultivation as demand from competing sectors—maize is also used by the animal feed and starch industries—drove up farm gate prices.

According to the government, ethanol blended petrol has so far helped the country save ₹1.7 trillion in foreign exchange by replacing imported crude oil (between November 2014 and February 2026). Over this period, India slashed carbon emissions by 87 million tonnes, equivalent to planting about 350 million trees. In the Ethanol supply year (ESY) 2024-25, which runs from November to October, (in line with the cane harvesting and crushing timelines followed by sugar mills), India saved over ₹40,000 crore via substitution of imported crude (the annual crude oil import bill is more than ₹10 trillion). These are notable achievements: boosting the rural economy and lowering the crude import bill to an extent, while reducing emissions on the road.

But how will the situation change when India transitions to higher ethanol blends with more flex fuel vehicles on the road? Five years down the line, how much ethanol will the country need in an E85/100 scenario? Will it have enough feedstock crops—cane, maize or rice—to divert for production of ethanol without impacting food availability? Can India catch up with Brazil, where 75% of personal vehicles run on flex fuel?

There’s more. In its bid to push ethanol blending, should India allow water guzzling crops such as rice? (It takes close to 10,000 litres of water to make one litre of ethanol using rice; in addition there are methane emissions.) Also, will growing more biofuel crops displace oilseeds and pulses—crops where India is already heavily dependent on imports?

According to Jain, Brazil, by mandating a base variant of 30% ethanol-blended petrol in addition to higher blends E85 and E100, was able to replace half of its petrol consumption with ethanol. “That’s the maximum limit we can strive to achieve. India will need to produce 2.5 times the current ethanol production to reach that scale of blending,” Jain adds. This means an ethanol requirement of close to 34 billion litres, compared to the current requirement of 13.5 billion litres for E20 blending (in ESY 2025-26).

“India can achieve this scale within the next five years,” Jain argues. He adds that the transition will allow consumers to choose their preferred blends at fuel stations. Higher ethanol blends will be cheaper, as they are in Brazil, but offer less fuel efficiency (because ethanol has lower energy density than petrol). Farmers will benefit due to higher demand for feedstock crops.

The sugar industry lobby, Indian Sugar and Bio-Energy Manufacturers Association (Isma), has a more conservative estimate. Even if India mandates that every internal combustible engine (ICE) vehicle be a flex fuel variant, it expects an additional requirement of less than 4-5 billion litres by 2030. “The existing capacity set up by the industry (about 20 billion litres, annually) is sufficient for this transition,” says Deepak Ballani, director general, Isma.

Another industry body, All India Distillers’ Association (Aida), has a radically different number. “There is an opportunity to replace imported petrol with ethanol at five times the current levels. This can help India save ₹2 trillion annually in fuel imports,” says Bharati Balaji, deputy director general at Aida. She explains that this means an annual ethanol requirement of 50 billion litres.

The ethanol requirement estimated by the three industry associations is a wide range, from 1.4 times to close to five times the current production. These estimates vary because of assumptions on how government policy may shape up and how adoption rates by car users play out.

But some experts contend that higher ethanol blends may not be practically feasible without radically increasing crop productivity and allowing more of surplus rice to be used for producing ethanol.

“India has moved in the right direction with aggressive investments in biofuels, which include ethanol, compressed bio-gas, pellets and bio-char,” says Shweta Saini, founder and chief executive officer (CEO) of the Delhi-based Arcus Policy Research. However, E85/E100 would be challenging because of limitations of land and lack of a structural surplus in feedstock crops. Even to maintain E20 blending levels, India will need to produce more ethanol every passing year as fuel demand increases by 4-5% annually.

In addition, higher blending ratios will entail additional ethanol requirements because it will drive up demand for blended petrol because of ethanol’s lower energy density. Therefore, it would be wise for India to not breach the E25 blending ratio, says Saini. “Unless of course, Indian farmers get access to genetically modified technology (with maize, for instance) which can lead to higher productivity.”

One fact and another recent development lend credence to Saini’s argument. Corn yield in India, at around 3.5 tons/hectare, is far lower than in Brazil and the US (6-11 tons/hectare), the world’s top two ethanol producers. On 13 May, India prohibited sugar exports due to lower-than-anticipated production and deficit rains forecast for the 2026 monsoon season. Meaning, there may be less sugar available for ethanol production in the coming year.

This effectively means that a water-intensive crop is sold at a subsidized rate to make ethanol.

Data from a recent public seminar organized by Delhi-based thinktank Arcus Policy Research, which cited reports by the Union agriculture ministry and Tamil Nadu Agriculture University, show that it takes 9,854 litres of water to produce one litre of ethanol from rice (excluding water used during processing). For maize and sugarcane, these numbers are lower, at 3,764 litres and 3,837 litres of water, respectively.

Gema president Jain brushed these concerns aside. “India has so much surplus rice that it is scrambling to find space to store the grain. The only way farmers can earn more is by supplying an industrial product like ethanol. Further, we expect crop productivity to reach higher levels in coming years,” Jain says.

Immediately, however, India’s food basket faces a problem. Farmers in states such as Madhya Pradesh are moving away from oilseeds, including soybean, to grow maize and rice. In Karnataka and Maharashtra, they are ditching cotton and groundnut for biofuel crops. This threatens to deepen India’s import dependency for pulses and edible oils (as well as cotton). Farmers planted more maize, rice and sugarcane last kharif, with the area under these crops higher by 20%, 9% and 13%, respectively, compared to the previous five-year average (the increase was also driven partly by a robust monsoon). Simultaneously, the area under pulses and oilseeds, such as soybeans, fell by 7% and 5%, respectively.

In FY26, India imported cooking oils and pulses worth over $23 billion (more than ₹2 trillion). To put that in perspective, the pulses and cooking oil import bill for one year is higher than what India saved by substituting imported crude with ethanol over more than a decade ( ₹1.7 trillion).

“Pulses and oilseeds are structurally important to India’s consumption basket and nutritional outcomes, yet they are shifting lower down the priority order for the nation’s cultivators,” observed the Economic Survey released in January. “Over time, this imbalance risks entrenching India’s dependence on edible oil imports and exposing domestic food prices to greater volatility during supply shocks. This highlights an emerging tension between Aatmanirbharta (self-sufficiency) in energy and Aatmanirbharta in food,” the survey added.

As India mulls over an aggressive ethanol blending pathway, the Survey’s warnings are worth paying heed to. Yes, Brazil is a notable biofuel success story. But with a population of just 210 million (a seventh of India’s), it has far fewer mouths to feed. And that allows Brazilians to have any blend they like.