India's aggressive ethanol blending programme is emerging as a major shield against global oil supply disruptions triggered by the escalating Middle East crisis, even as soaring crude prices threaten to wipe out the profits of state-run oil marketing companies (OMCs).
According to a report published in The Times Kuwait, India's long-term ethanol blending strategy has helped the country reduce dependence on imported crude oil at a time when global markets remain volatile due to disruptions linked to the closure of the Strait of Hormuz.
The report noted that India, which began with a modest 5 per cent ethanol blending target in 2003, has now achieved nearly 20 per cent ethanol blending in petrol ahead of schedule. The country is also preparing to introduce E85 petrol and E100 fuel for flex-fuel vehicles capable of running on multiple ethanol blends.
India's ethanol blending level was only 1.53 per cent in 2014, but strong policy support, expansion of distillery capacity, and the 2018 National Policy on Biofuels accelerated growth. The programme widened ethanol production beyond sugarcane molasses to include surplus rice, maize, damaged food grains, and agricultural residues, reducing reliance on water-intensive sugarcane cultivation.
The biofuel push, initially launched as an environmental initiative to reduce carbon emissions, has now evolved into a broader strategy focused on energy security, rural development, and economic resilience. Rising demand for ethanol feedstock is benefiting farmers, distilleries, transport operators, and biofuel infrastructure developers while generating employment across sectors.
However, despite gains from ethanol blending, India's fuel retailers are under mounting pressure due to rising crude prices amid the ongoing US-Iran conflict.
Speaking at the CII Annual Business Summit 2026 in Mumbai, Petroleum Minister Hardeep Singh Puri warned that sustained high crude prices could erase the entire FY26 profits of public sector OMCs.
Puri said state-run fuel retailers are currently losing nearly Rs 1,000 crore every day, with combined quarterly losses potentially touching Rs 1 lakh crore if crude prices remain elevated. Global crude oil prices have already crossed the $100 per barrel mark due to fears of prolonged supply disruptions in West Asia.
Industry estimates suggest that Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum could together report losses of nearly Rs 1.2 lakh crore in the first quarter of FY27 alone.
Addressing concerns over fuel availability, the minister assured that India currently has enough crude oil and LNG reserves for around 60 days, while LPG stocks are sufficient for nearly 45 days. He added that daily LPG production has been ramped up from 35,000-36,000 tonnes to nearly 54,000 tonnes to cushion supply-side disruptions.
(With inputs from IANS)
