Fuel, Farmers, And Forex (FFF): India's Ethanol Policy

Abstract

Abstract India planned to increase the blending of ethanol—a fuel made from sugarcane and grains—with petrol for three main reasons. This paper examines this policy through three simple ideas: Fuel, Farmers, and Forex. “Fuel” refers to the petrol used in vehicles. “Farmers” refers to those who grow sugarcane and grains used for ethanol production. “Forex” refers to the foreign exchange India saves by reducing crude oil imports. India reached its target of 20% ethanol blending in petrol, known as E20, by March 2025, five years ahead of the original schedule. This paper explains how the policy has helped farmers earn more income and enabled India to save foreign exchange. It also examines a real news case in which E20 petrol was reported to have caused damage to a car engine, highlighting one of the practical concerns associated with the policy. The paper concludes that the policy has performed well in supporting farmers and saving foreign exchange, but the fuel and vehicle-compatibility aspects still present genuine challenges that need to be addressed.