Inside the flex fuel strategies of Maruti, Tata Motors, Mahindra and Hyundai
New Delhi: Last month, Nitin Gadkari, union minister of road transport and highways, drove in a 100% bio-ethanol flex-fuel Toyota Innova to an event. Gadkari, who has been the driving force behind the changes in India's motor vehicle policies, has been particularly vocal about the use of locally produced bio-ethanol to power flex-fuel vehicles in India. He got behind the wheel of the Toyota Innova to drive the point home, urging the Indian automotive industry to adopt ethanol as an eco-friendlier and cost-effective option to petrol.
India ranks third globally in crude oil imports, after China and the US. It imported 87.7% of its crude oil (233.1 MMT) requirements in 2023-24, according to data from the ministry of petroleum and natural gas. To reduce this dependency on oil imports, the government has been promoting electrification in the transport sector, as well as ethanol blending with petrol, and production of compressed biogas.
It isn't just about reducing imports. At the
COP26
UN Climate Change Conference 2021 in Glasgow, India had indicated its intent to move away from fossil fuels at the earliest. Since then, there has been a policy push to decarbonize 50% of the country's energy by 2030 and reduce dependency on fossil fuels. The Indian government is gunning to reduce CO2 emissions by 1 billion tonnes that year in a bid to achieve the larger roadmap of net-zero emissions by 2070.
Flex fuels are a big part of the government's plans to reduce oil imports and go green. As the term suggests, a flex-fuel vehicle is one that is flexible with fuel, in the sense that it can run on pure petrol or with ethanol blends of up to 85% or even 100%.
Since ethanol is sourced from agricultural crops such as sugarcane, corn and wheat, the fuel blend is cleaner as it has lower emissions. In theory, it could also be less costly, particularly with a higher ethanol blend, if it is subsidised by the government.
Prathamesh Chaudhary, principal, automotive at Arthur D. Little India, estimates that 1 litre of E85 (85% ethanol blended with gasoline) at current rates would cost
₹
60-70, as compared to around
₹
95 for a litre of petrol (in Delhi). Prices of flex-fuel will also differ based on region, as with gasoline prices.
The flex-fuel price will also depend upon the availability of ethanol. The ministry of petroleum and natural gas is currently in the process of setting up a dozen plants for ethanol production but production on a large scale is yet to start. Petrol prices will also have a bearing on the 15% gasoline blend in flex-fuel. The good news is that flex fuel received a boost with a regulation to market petrol blended with 20% ethanol coming into force on 1 April.
Carmakers in India are aligning their strategies in line with the
government's push
towards green and less polluting alternative fuels. Indeed, vehicle manufacturers were vying with each other to display flex-fuel and hydrogen fuel cell electric vehicles (FCEV) at the Bharat Mobility Global Expo in January.
Maruti Suzuki, Tata Motors, Mahindra & Mahindra, Hyundai, Toyota, and other carmakers have been working on alternative fuel technologies such as compressed natural gas (CNG), flex-fuel, hydrogen fuel cell electric vehicles, or pure battery electric vehicles. Even two-wheeler makers are experimenting with flex-fuel concept models.
Maruti and Toyota are betting big on flex-fuel vehicles, which will also help them comply with CAFE or Corporate Average Fuel Efficiency norms (aimed at reducing fuel consumption and CO2 emissions), says Chaudhary. Tata Motors and Mahindra have taken the electric vehicle path, whereas Hyundai is keeping its options open, he adds.
Here's a more detailed look at what the top carmakers are doing on the alternative fuel front.
According to Suzuki's 2025-2030 mid-term plan, the carmaker will focus on technologies that reduce energy consumption at every stage, based on the principles of Sho-Sho-Kei-Tan-Bi (smaller, fewer, lighter, shorter, beautiful) to minimise environmental risk.
The Wagon R FFV, Maruti's first flex-fuel, mass-segment prototype car, can run on an ethanol blend ranging from 20% to 85%. Ethanol fuels are biogenic as they are largely manufactured by using plant-based sources. Therefore, FFV technology can help reduce
carbon emissions
by approximately up to 79% in comparison with vehicles that run on gasoline fuel.
'We need powertrain solutions that best suit the requirements of customers of different product segments and also help in enhancing the energy security of the country," a Maruti Suzuki spokesperson told
Mint.
The powertrain system enables a vehicle to move by generating power and transmitting it to the wheels.
Accordingly, the company has adopted different powertrain technologies, spanning battery electric vehicles, hybrid electric vehicles, and vehicles powered by alternative fuels such as ethanol, compressed biogas and CNG.
By March 2023, the carmaker had already made its entire product range E20 fuel compliant by carrying out changes in the fuel hoses of the flex-fuel engines, among other components.
The company believes the market is positioned to leverage green fuels such as ethanol and biogas considering the availability of resources within the country. India has a good amount of agricultural biomass required to produce these green fuels. 'These alternative fuels are completely renewable, have no import content, are carbon-negative and will benefit our farmers as well," the Maruti spokesperson added.
Hyundai unveiled its prototype, Creta flex-fuel, at the Global Expo. The vehicle is capable of running from E0-E100, (100% petrol to 100% ethanol fuel).
Tarun Garg, wholetime director and chief operating officer of Hyundai Motor India, maintains that Hyundai was one of the pioneers in flex-fuel technology and says that its flex-fuel cars have been running successfully in Brazil for years now. The company's HB20 model, a compact car, was launched in Brazil in 2012.
About 90% of new cars, SUVs, pickup trucks and commercial vehicles sold in Brazil are flex-fuel capable. The passenger car segment accounted for the largest share of 40% in 2025. The
Brazilian flex-fuel market
is projected to grow at a compounded annual growth rate of 7.4% between 2025-2032, according to Coherent Market Insights, a global market intelligence and consulting firm.
The key driver for the Brazilian market is the significant price difference between gasoline and ethanol—the latter being 10%-30% cheaper, depending on global oil price fluctuations. Ethanol is made from sugarcane and Brazil was the world's largest producer of sugarcane in CY2024 (India ranked second). Almost all major carmakers have a presence in the Brazilian flex-fuel market, with the most popular cars being the Toyota Corolla, Renault Kwid, Chevrolet Onix Plus and Hyundai HB20.
Garg says Hyundai will bring its first flex-fuel car to India in 2026 once there is clarity on the government's policy on flex- fuels. The Society of Indian Automobile Manufacturers of India (SIAM) is in discussions with the government on the specific policy enablers required to promote the use of flex-fuel vehicles. These would encompass everything from pricing of flex-fuels, to availability of the fuel, to incentives, and CAFE norms.
In January, Hyundai unveiled its fuel cell electric SUV Nexo at the Global Expo and later at the Seoul Mobility show in Korea. The South Korean carmaker has formed a partnership with Indian Oil Corporation to test the technology for two years and assess its economic viability for mass usage in India.
Garg feels fuel cell technology as a mainstream fuel in cars is still in its early days in India. However, the carmaker has invested
₹
180 crore to establish a hydrogen innovation centre at IIT Madras to help reduce the cost of producing it. At current prices, the cost is pegged at $5-6 per kg. The carmaker is keen to cut the hydrogen price to $2 per kg. Hyundai is working with the Tamil Nadu government and IIT Madras to advance the technology, not only in cars but also to promote it as an alternative option for energy generation.
Tata Motors had displayed the flex-fuel Punch prototype at the recently concluded Global Expo, with E20 to E85 capability. 'At present all our cars are 20% ethanol blend certified," says Mohan Savarkar, vice president and chief product officer, Tata Motors Passenger Vehicles.
All oil companies today blend petrol with ethanol and this percentage improves as ethanol availability rises. An average 14%-15% ethanol blended gasoline is available pan India.
'We are working on a higher ethanol blend of 85%," adds Savarkar. Actual implementation will depend on when the government wants to progress on this journey. Roughly, the government has indicated that it plans to introduce
higher ethanol blending
in petrol in 2030, so automakers are prepping up for this implementation.
Explaining the technicalities of the flex-fuel engine, Savarkar elaborated that some engineering changes are required to ensure that ethanol blended gasoline can combust in the engine efficiently. Ethanol has to reach a certain temperature to ensure proper combustion. Many powertrain parts will change right up to the fuel tank. Similarly, piping and valves have to be made ethanol proof.
Not to be left behind in the flex-fuel race, the Indian SUV manufacturer has also developed a flex-fuel prototype of its sub-compact XUV 3XO SUV. The gasoline/diesel SUV, which was launched last April, sold around 98,000 units in FY25. An electric option of the XUV 3XO is also on the cards. The concept model can run on 85% ethanol blended gasoline.
The SUV maker declined to offer any comment on its future plans for alternative fuels.
Flex-fuel vehicles offer India a strategic opportunity to reduce its $120 billion
oil import bill
, boost rural incomes (as ethanol is made from agricultural crops), and cut emissions by up to 50% through E20 and E85 ethanol blends, says Ravi Bhatia, president of Jato Dynamics India, an automotive insights and consulting company.
Despite industry momentum, four challenges remain: limited E85 infrastructure, high vehicle costs (
₹
25,000 premium plus 28% GST), feedstock constraints, and policy favouritism towards EVs.
The solution requires tax parity with EVs (5% GST), infrastructure investment, and consumer education, adds Bhatia. Brazil's successful 90% flex-fuel vehicle market share offers a proven blueprint as India advances its 2025 E20 target.
India has sufficient surplus feedstock to achieve its E20 targets; 2G ethanol technology has huge potential to enable higher blending beyond E20 and help secure long-term sustainability for flex-fuels, maintains Arthur D' Little's Chaudhary.
Based on the current plans of oil public sector undertakings, India will reach 2G ethanol production capacity of 65 crore litres by 2030, which will suffice for E20. The government is actively encouraging setting up of 2G bio-refineries through PM JI-VAN Yojana and the National Policy on Biofuels.
Tata Passenger Vehicles' Savarkar feels that cost could be a constraint for the consumer in purchasing a flex-fuel vehicle. The fuel efficiency of the car also drops by 30% by using 85% ethanol blended gasoline, making it a costly proposition. Regulating prices of ethanol blended petrol to boost usage could be a solution here.
The government may be willing to subsidise flex-fuel as it reduces crude oil imports, elaborates HMIL's Garg. Globally, as ethanol blending rises, the fuel price comes down.
Eventually, flex fuels are likely to co-exist with other sources, such as CNG and electricity. The government is in the process of levelling the playing field, and market forces will thereafter shape the contours of India's automobile market.
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