India Launches Cheaper E85 Fuel; Older Cars Balk at Ethanol Blending

India’s push into high-ethanol fuels reached a milestone on Friday with the commercial launch of E85 petrol in the capital, priced at Rs 82.12 per litre – exactly ₹20 below the standard E20 blend. Union Petroleum Minister Hardeep Singh Puri inaugurated Delhi’s first dispensing station at Indian Oil’s Pusa Road outlet, part of a plan to expand from 48 to 500 such pumps by December and eventually to 5,000 by 2027. The government, which spent $120 billion on crude imports last year, aims to lift ethanol blending to 26 per cent by 2030-31 and views the cheaper, cleaner fuel as a route to cut both pollution and foreign-exchange outflows.

Yet the rollout unfolds against a backdrop of consumer discontent with the existing E20 blend. A year after India achieved 20 per cent ethanol blending nationwide, a LocalCircles survey of 42,000 owners of pre-2023 petrol vehicles found that half now wish to switch back to E0 or E10. Respondents across 316 districts report lower fuel efficiency and unusual engine wear, translating into a tangible financial burden. The findings suggest that the forced obsolescence of older vehicles may accelerate as ethanol ratios rise, and they underscore the tension between environmental targets and the realities of the country’s legacy fleet.

Viewed from Jakarta, the Indian experience resonates with other developing economies that are intervening in essential commodity markets. Indonesia is grappling with a shortage of the subsidised cooking oil brand Minyakita in cities such as Cimahi, while the government prepares to raise its official ceiling price in response to rising crude palm oil costs. Traders in Pasar Atas Baru note that despite the official price of Rp 15,700 per litre, stocks are scarce, and any increase will test the government’s ability to shield households from global commodity swings.

The dual narrative from New Delhi and Jakarta illustrates a broader pattern: governments in the Global South are using price signals and supply-side measures to manage the energy and food transitions. India’s ethanol gambit may lower the pump price for flex-fuel vehicles, but it risks alienating millions of drivers whose older cars cannot safely digest the higher alcohol content. As the world’s third-largest oil importer accelerates its biofuel roadmap, the friction between policy ambition and on-the-ground adoption will determine whether the model is ultimately exportable to other nations facing similar trade-offs.