E85 fuel must be about 25% cheaper than petrol to make sense for drivers, IIT Delhi study finds

High-ethanol E85 fuel will need to sell for roughly 25% less than petrol for drivers to break even on running costs, according to a white paper by IIT Delhi and the All-India Distillers’ Association (AIDA).

The arithmetic

E85 contains 80-85% ethanol and can only be used in flex-fuel vehicles. Ethanol contains less energy than petrol, so cars go fewer kilometres per litre. The paper gives an example: if petrol costs ₹100 a litre and a car does 20 km on a litre of petrol but 15 km on E85, then E85 must cost ₹75 a litre to match the running cost per kilometre.

That matters now. With global oil prices high because of the Strait of Hormuz crisis, petrol costs ₹102.12 a litre in Delhi and ₹111.21 in Mumbai.

Where E85 stands

• E85 went on sale at 48 public-sector fuel stations in June 2026.
• The plan is to reach 500 outlets by December 2026 and about 5,000 by December 2027.
• E20, petrol with 20% ethanol, is already sold across the country.
• The government has said E85 for certified flex-fuel vehicles does not mean the overall blending level will go above 20%.

Producing ethanol is not cheap either. For 2025-26, ethanol from C-heavy molasses costs ₹57.97 a litre and maize-based ethanol ₹71.86 a litre.

What the authors recommend

Professor P.M.V. Subbarao, head of mechanical engineering at IIT Delhi, and research scholar Saptashish Deb propose a “dynamic ethanol-gasoline price linkage” that sets E85’s price based on fuel economy, not just the pump price. They also call for a separate strategy for two-wheelers, which use about 60% of India’s petrol.

Sources: ThePrint, Goodreturns fuel prices.