India’s ethanol industry is poised to enter a new phase of growth as the country moves beyond the successful nationwide rollout of 20% ethanol blending (E20), according to a new report released by KPMG in India.
The report, titled “Ethanol: Beyond E20 – Repositioning Ethanol as India’s Transport Energy Backbone,” outlines a roadmap for developing a more diversified, sustainable and resilient ethanol ecosystem amid evolving energy security priorities, decarbonisation goals and rising mobility demand.
Focus shifts from scale to optimisation
According to the report, India’s ethanol blending programme has achieved significant scale, with E20 operationalised across the country. However, sustaining growth in the coming years will require a transition from capacity creation to system optimisation.
The report highlights opportunities and challenges related to feedstock availability, supply chain efficiency, infrastructure readiness and policy alignment as the sector prepares for its next phase of development.
Need for feedstock diversification
KPMG emphasised the importance of expanding the use of second-generation (2G) ethanol and alternative feedstocks such as maize and agricultural residues to support future supply growth and reduce dependence on first-generation (1G) ethanol pathways.
The report noted that addressing concerns around feedstock availability, food-versus-fuel balance, pricing mechanisms and logistics will be critical to ensuring a stable and reliable ethanol supply ecosystem.
Infrastructure and policy support critical
The report also underlined the need for coordinated ecosystem development, including wider adoption of flex-fuel vehicles, expansion of blending and distribution infrastructure, enhanced storage capacity and greater policy coherence.
It further stated that improved coordination, transparency and system-level visibility across production and supply chains could significantly enhance operational efficiency across the ethanol value chain.
Sustainability remains a key priority
From a sustainability perspective, the report examined ethanol’s role in reducing emissions from the transport sector while highlighting the importance of addressing lifecycle emissions, water-use efficiency and resource intensity.
According to the report, embedding sustainability principles across the value chain will be essential to align future production growth with broader environmental objectives.
Industry leaders outline future roadmap
KPMG International Global Head of Energy, Natural Resources and Chemicals (ENRC), Anish De said, “As energy systems undergo structural transformation globally, India’s ethanol programme stands as a compelling demonstration of how aligned policy frameworks, industry coordination and scale can decisively shift the needle on import dependence while sustaining economic momentum. Having achieved the E20 milestone ahead of schedule, the imperative now is to move from scale creation to system intelligence, where ethanol transitions from a blending mandate to a foundational pillar of a resilient, flexible and future-ready transport fuel ecosystem.”
KPMG India Partner and National Head, Oil and Gas, Vivek Rahi said, “India’s ethanol journey has evolved from a targeted blending directive to a structurally significant component of the nation’s transport energy architecture. As the sector advances beyond E20, the strategic priority must shift toward feedstock diversification, demand-side flexibility and infrastructure alignment at scale. This inflection point presents a defining opportunity, to reposition ethanol not merely as a compliance instrument, but as a sovereign energy lever capable of reinforcing long-term energy security and accelerating India’s low-carbon transition.”
Key findings
Among the key findings, the report noted that second-generation ethanol and non-food feedstocks are expected to play a pivotal role in supporting incremental supply growth. It also highlighted the need for storage, transportation and distribution networks to evolve into multi-grade systems capable of supporting higher ethanol blends.
The report further pointed to the importance of policy alignment and market-responsive pricing mechanisms in maintaining long-term sector viability and investor confidence.
Building a resilient ethanol ecosystem
KPMG said the ethanol sector is now transitioning from a phase focused on achieving scale to one centred on system-level alignment, resilience and sustainability. The report concluded that future progress will depend on feedstock diversification, evolution of pricing and policy frameworks, and coordinated development across supply, infrastructure and demand ecosystems.