According to a report by InCred Research, India’s drive for E85-compatible cars could raise yearly ethanol demand by around 21% by fiscal 2040 when compared to a scenario based only on E20 fuel blending.
According to the research, the government’s new emphasis on E85 gasoline is the first significant attempt to extend the nation’s ethanol program beyond the E20 roadmap, generating demand for ethanol in addition to the current blending ecosystem.
Flex-fuel technology has been shown by automakers, and India has already developed significant ethanol production capacity to satisfy the E20 target. According to the paper, policymakers are also working to improve agricultural value chains and lessen reliance on imports of crude oil.
If E85 adoption proceeds steadily, overall ethanol demand might increase from 13 billion liters in fiscal 2026 to 29.63 billion liters by fiscal 2040, according to InCred Research’s predictions. By fiscal 2040, demand would rise 25.74 billion liters under a base case that assumes just E20 blending.
By fiscal 2040, that would lead to an additional 3.89 billion liters of ethanol demand per year, a 21% increase over the E20-only scenario.
The predictions in the research are predicated on a 5% annual rise in gasoline consumption and imply that between fiscal 2036 and fiscal 2040, 50% of new gasoline vehicle demand will come from flex-fuel vehicles.
According to the estimates, the demand for ethanol would slightly increase in the early years of E85 adoption, rising from 15.80 billion liters in the base case to 16.04 billion liters in fiscal 2030. As flex-fuel vehicle penetration rises over the next ten years, the disparity would grow considerably.
According to InCred Research, the percentage of flex-fuel vehicles would increase from 1% in fiscal 2027 to 50% by fiscal 2036 and stay there until fiscal 2040.
According to the analysis, by fiscal 2040, E85 gasoline would supply about 6 billion liters of ethanol annually, contributing to an increase in overall ethanol blending levels from the current E20 framework to roughly 23%.
The brokerage said that there are still a number of questions regarding E85’s long-term viability.
Whether consumers will accept lower fuel efficiency linked to higher ethanol blends, whether automakers will actively promote flex-fuel platforms or treat them primarily as regulatory compliance products, and whether flex-fuel vehicles will receive significant fiscal incentives are some of the important questions.
The study also emphasized the lack of knowledge over whether E85 will continue to be a specialized technology or develop into a common transition fuel in India’s transportation industry.
Despite these doubts, InCred Research stated that India’s experience with the E20 indicates ambitious ethanol targets can be met more quickly than first anticipated.
“India’s E20 rollout itself was considered unrealistic only a few years ago,” the research stated.
The brokerage contended that if demand grows outside of the E20 program, larger ethanol producers with established scale will be the main winners.
It continued to have favorable opinions on businesses including BCL Industries, Gulshan Polyols, and TruAlt Bioenergy, pointing to their sizable grain-processing facilities, ability to obtain feedstock, and ability to finance future growth.
Any growth in India’s ethanol aspirations is likely to benefit businesses who have already proven they can grow output profitably and operate at scale, according to the report.
According to InCred Research, the introduction of E85 has the potential to significantly alter the outlook for India’s agricultural and biofuel industries over the next ten years by providing an additional growth opportunity on top of the current ethanol blending framework.
