India’s regulatory push for high-blend ethanol and hydrogen-CNG fuels is facing a reality check from the automotive industry, as manufacturers weigh the technical feasibility against low market volumes and inconsistent fuel availability.
While the draft notification for E100 and E85 has been cheered by the sugar and distillery sectors, automakers, particularly in the luxury segment, remain skeptical of the business case for diversifying powertrains beyond the current E20 standards.
The E100 will only be available as an option to the vehicle owners across oil pumps in India and not as a monofuel and car makers too would not have to tweak much for the compatibility, industry experts have said.
Luxe cars
And, luxury car makers such as Mercedes-Benz said it won’t necessarily require to make E100 compliant vehicles as the luxury car market is still 1 per cent of the total passenger vehicle market, and E20 can be an ideal fuel.
“The luxury car segment is only 1 per cent of the total passenger vehicle market... we are already giving gasoline (petrol), diesel, electric and some plug-in hybrids. To complicate it with more, I don’t think we at Mercedes-Benz see any merit in that because it is a very small volume (luxury car market) and it is not going to change the game,” Santosh Iyer, MD and CEO, Mercedes-Benz India told businessline.
He said the total luxury car market in India is around 50,000-55,000 cars, and even if it is 60,000 cars, giving more powertrain options would not make a strong business case.
“We still have fuel-efficient engines like diesel, which are highly fuel-efficient, so customer will do a trade-off on what he gets with a flex-fuel... The price has to be significantly cheaper on the fuel for a customer and better mileage. It is a complete TCO (Total Cost of Ownership) argument for the customer,” Iyer added.
Another original equipment manufacturer (OEM) said that though this is a “very good” move at the moment by the government, to enable flexible fuel vehicles (FFVs) in the country, the oil marketing companies have to make sure such fuel is available in all their pumps across the country.
“The auto industry has been working for the last two years in making E100 compliant engines, but customers will buy such vehicles only when blend of fuel is available in the country. There were 400 such fuel pumps which were dispensing E100 fuel in states such as Maharashtra, Tamil Nadu and Uttar Pradesh, where there were ethanol surplus, but that has come down to only three-four pumps now,” said an auto industry veteran.
500 pumps
According to sources, the oil marketing companies in the recent meetings on FFVs and Corporate Average Fuel Efficiency (CAFE-III), have not committed to make E100 as yet, but the government’s intention is to make E100 fuels available in at least 500 pumps across some of the states by end of this year.
“Government’s plan is to start these pumps at least in those states where sugarcane or ethanol production is highest in the country,” said an official privy to the developments.
Published on April 30, 2026