NEW DELHI, November 4, 2026 — India’s push to blend 20% ethanol with petrol faces a fresh supply challenge as drought conditions linked to El Niño reduce the availability of maize and sugarcane, raising the prospect that the average blend could fall to about 15%–17% in the supply year that began this month. The potential retreat would expose the vulnerability of a fuel programme that depends on agricultural feedstock as well as distillery capacity.
Reuters reported on Wednesday that monsoon rainfall was nearly 13% below normal, damaging crops used to produce ethanol and adding to pressure on food prices. With the government balancing energy security against the cost and availability of food, the supply of grain- and sugar-based ethanol is under strain. The projected blend range is an estimate reported by Reuters, not an announcement that the government has formally abandoned its 20% target.
The ethanol programme is intended to reduce the amount of petrol supplied from imported crude oil by replacing part of the fuel with domestically produced biofuel. The government’s E20 goal has also encouraged investment in distilleries and supply chains. But a blending target can be met only when enough ethanol of the required quality is available, deliveries reach fuel depots and the underlying feedstock can be sourced without unacceptable pressure on food and animal-feed markets.
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Maize and sugarcane are important inputs for India’s ethanol industry. Poor rainfall can reduce output and raise the cost of procuring crops, while farmers and food processors also need those supplies for food, livestock feed and other uses. The resulting competition means that a higher ethanol blend is not simply a matter of operating more distilleries. Producers need reliable feedstock at prices that make ethanol commercially viable without worsening food inflation.
Reuters reported that the government had halted procurement of sugar-based ethanol and lowered the purchase price for corn-based ethanol. Those steps point to a supply environment in which the availability and cost of raw materials are shaping procurement decisions. Rice could provide an alternative feedstock, but the report said that route would be expensive because government rice is sold to producers at a price below the cost of procurement and storage.
The constraint comes after companies expanded production capacity in anticipation of rising demand. India’s distillery capacity is estimated at about 20 billion litres a year, according to the Reuters report. Installed capacity, however, is not the same as actual output: plants need crops, water, energy and working capital, and they must be able to sell their output under the procurement arrangements set for the supply year.
If the average blend falls below 20%, oil marketing companies may need to use a larger share of conventional petrol to meet demand. That could increase the country’s reliance on imported crude at a time when global energy prices and foreign-exchange costs remain important to the trade balance. Reuters reported that the ethanol programme has saved India nearly ₹2 trillion in oil costs since 2014, underscoring the economic rationale behind substituting domestically produced biofuel for some imported fuel.
The possible reduction also illustrates the limits of measuring the programme only by the percentage blended. A higher share can support import substitution, but it must be assessed alongside the cost of feedstock, food availability, water use, farm incomes and the environmental performance of the full production chain. A drought-driven fall in crops can put pressure on all of those objectives at once.
The next supply-year figures will show whether the shortfall is temporary or persists through the procurement cycle. Crop output, rainfall and reservoir conditions, the availability of alternative feedstocks and the purchase terms offered to producers will influence the result. The government may have to balance the pace of blending against food security and inflation concerns, but no formal revision of the national E20 target was confirmed in the reporting reviewed for this article.
For now, the central issue is feedstock availability. India has built significant ethanol-production capacity and a procurement framework around higher blending, but the drought has exposed how closely energy policy remains tied to the agricultural calendar. The eventual blend will depend on how much ethanol can be supplied without intensifying pressure on food and feed markets.