Government initiatives to promote ethanol blending

To capitalize on these benefits, the Indian government has undertaken proactive steps to boost ethanol blending in petrol:

- Increased blending targets: The target for ethanol blending has increased from 5% by 2030 to 20% by 2025 under the Ethanol Blended Petrol Program.

- Setting up new distilleries: Soft loans are provided to set up new grain-based distilleries and expand cane-based facilities under the Interest Subvention Scheme.

- Ethanol pricing policy: Higher prices than ethanol production cost are announced to encourage investments. State-run oil marketing firms offer firm off-take commitments.

- Ethanol infrastructure: A separate budget provision sanctions projects to set up new ethanol storage terminals and expand the pipeline infrastructure nationwide.

- Subsidies for flexi-fuel vehicles: Some states provide purchase incentives up to 15-20% for consumers opting for ethanol-compatible flexi-fuel vehicles over conventional models.

With consistent efforts, India has ramped up blending from 0.67% in 2013 to 8.1% in 2022 exceeding initial targets. If this 20% target can be achieved, it will displace over 10 million tons of crude oil imports annually.

Challenges in widespread flexi-fuel adoption

However, there are still some roadblocks that need to be addressed for flexi-fuel vehicles to become mainstream:

Limited models: Only a handful of , India Flexfuel Cars flexi-fuel variants are available with mainstream automakers like Maruti and Hyundai currently. More options are needed for customer choice.

Higher initial cost: Since flexi-fuel technology includes additional components, the current flexi-fuel models are priced 5-10% higher than equivalent gasoline variants.

Lack of pumps: Only 453 ethanol pumps are currently operational even as regular petrol pumps are around 71,000. Widespread geographical dispersion of E85 pumps is required.

Customer awareness: Most Indian customers are not aware of flexi-fuel technology benefits and operational modalities. Large awareness campaigns are needed to popularize 'Flexi' badges.

Need for uniform fuel standards: Fuel quality may vary across states due to different production practices. An IS specification and quality surveillance are critical for customer confidence.

Addressing the issues around cost, availability, standards and awareness will be key to unlocking the flexi-fuel value proposition fully. PPP models and fiscal incentives can aid the effort to drive adoption at scale. Automakers also need to expedite flexi-fuel model launches with competitive pricing.

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