India’s ethanol blending programme (EBP) has become one of the country’s more visible energy security interventions. Launched in 2014 to cut crude oil imports, the programme has scaled rapidly since 2021 by incrementally blending ethanol produced from sugarcane, rice, and maize with petrol, reaching a milestone of 20% blending (E20) in 2025, five years ahead of the original target.

The next phase of the programme cannot be guided by narrow blending and petrol substitution targets alone. India now needs a more transparent way to account for ethanol’s rising fiscal and sustainability implications, especially the pressure it places on land, water, and food systems.

Since 2014, official estimates credit the programme with foreign exchange savings of more than ₹1.9 lakh crore and additional farmer incomes of more than ₹1.6 lakh crore. In 2025, ethanol blending offset crude imports by close to 3.5%, amounting to savings of nearly ₹42,000 crore. These are significant gains for a country that imports most of its crude oil. Yet, as India considers higher blends such as E22, E25, and E27, and explores blending diesel with isobutanol at up to 15% in the coming years, policy must ask a hard question: What is the full cost of scaling this domestic fuel, and who bears it?

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This matters because the ethanol economy is now structurally embedded. To support the programme, the central and several state governments provide incentives for setting up distilleries. Capacity has grown rapidly. While demand was nearly 12 billion litres in 2026, production capacity stood at around 20 billion litres. The investments in this........

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