India’s Ministry of Road Transport and Highways is not only gung-ho about the prospect of ethanol-blended petrol; it is moving ahead at full throttle to support high blending rate to as much as entirely replacing oil in a vehicle. With the recent amendment of the Central Motor Vehicles Rules, 1989, the government paved the way for motor vehicles to run on pure ethanol, branded as E100. Although it may take time to see E100-fuelled vehicles on Indian roads and the associated impact, we have a prequel to this drastic change in front of us. As we say, the proof of the pudding is in the eating.AdvertisementIndia has already made the transition to E20 petrol, containing 20 per cent ethanol, marking a significant milestone in its biofuel programme. The policy is intended to reduce crude oil imports, save forex, and strengthen energy security. Yet, as E20 becomes mainstream and the precursor to large-scale use of higher levels of petrol blending, an important question deserves closer scrutiny: How much can ethanol blending actually reduce India’s dependence on imported crude oil?Also Read | Bring back E10 for older vehicles. Work out food-versus-fuel trade-offThe question matters for an economy that imports over 80 per cent of its crude oil requirements. India’s crude oil import bill reportedly reached $137 billion in 2025, leaving the country exposed to volatile international prices and geopolitical disruptions. The impact of the ongoing West Asia conflict on the international oil trade and price holds a mirror up to us.While ethanol blending can displace a portion of petrol consumption (depending on the blending rate), its contribution to reducing crude oil imports must be assessed against the structure of petroleum demand and the technical constraints of refining. The latter entails a series of complex thermo-chemical processes, taking place in an oil refinery, which are optimised for a certain crude oil property and target petroleum outputs.AdvertisementPetrol accounts for only 15-18 per cent of the petroleum products processed from a barrel of crude oil. Diesel, by contrast, accounts for approximately 44-45 per cent. This asymmetry is central to understanding the limits of an ethanol-led strategy.The consumption gap is equally striking. Between FY 2020-21 and FY 2024-25, India consumed approximately 503 million tonnes of diesel, compared with 200 million tonnes of petrol. Diesel powers freight transport, agriculture and industrial logistics, making it integral to economic activity. Its demand is expected to remain substantial, with road diesel driving much of the projected growth in oil consumption.Ethanol blending, therefore, addresses a relatively small component of India’s overall petroleum demand. Its benefits are real, but the scale of those benefits should not be confused with an equivalent reduction in crude oil imports.A counterfactual assessment using FY2018-19 as the reference year helps illustrate the distinction. At an ethanol blending level of approximately 5 per cent, petrol consumption stood at 28.28 million tonnes. Modelling the impact of a 20 per cent blend, while accounting for the lower energy content of ethanol and the resulting reduction in vehicle fuel economy, suggests that petrol consumption could decline by approximately 15.56 per cent.This is a meaningful reduction in petrol consumption. However, it does not imply that crude oil imports will fall by an equivalent proportion.The reason lies in refinery economics. Crude oil processing produces several products, including petrol, diesel, liquefied petroleum gas, aviation turbine fuel and naphtha. Refineries can alter product yields to some extent, but the flexibility is not unlimited. Increasing the yield of diesel is constrained. Consequently, lower petrol demand does not automatically translate into a commensurate reduction in crude oil throughput.Policymakers must distinguish between petrol displaced by ethanol, expenditure avoided on petrol supply and the actual reduction in crude oil imports. These are related but different outcomes.There is a larger fuel transition opportunity that is largely overlooked. If reducing oil import dependence is a central objective, India’s biofuel strategy must give greater attention to diesel.Biodiesel blending has lagged behind ethanol, despite an earlier target of 5 per cent. Past efforts to promote non-edible oil feedstocks, including jatropha, encountered challenges involving land availability, input costs, technology and long payback periods. Subsequent efforts to use waste oils, including used cooking oil, have faced difficulties in aggregating feedstock from fragmented sources.Increasing biodiesel blending will require sustained investment in research and development, improved feedstock collection systems, viable supply chains and technologies that can support commercially sustainable production.you may likeComing back to the E100 story. Like E20, it holds promise. However, India will benefit from a broader measure of energy security. The impact of the country’s biofuel programme should be assessed based on actual reductions in crude oil demand and import expenditure, rather than relying solely on the volume of ethanol blended.With global oil markets increasingly vulnerable to geopolitical shocks, reducing import dependence remains a strategic imperative. Achieving this will require India to look beyond the petrol pump and address the full spectrum of its petroleum consumption. The real test of India’s biofuel strategy is not how much ethanol it blends, but how effectively it reduces the country’s dependence on imported oil.The writer is a Fellow in Energy, Resources & Sustainability vertical, CSEP. Views are personal