Following the nationwide implementation of E20 fuel, a senior executive from Toyota Kirloskar Motor (TKM) has advocated for a strategic policy pivot. The company's country head has stated that the government should now actively promote flex fuel vehicles (FFVs) through fiscal incentives and ensuring ethanol is priced cheaper than petrol at the pump.
The Call for a Flex Fuel Future
Vikram Gulati, the Country Head of Toyota Kirloskar Motor, made a strong case for this transition. He suggested that after establishing a specific fuel blend like E20, global best practices point towards promoting flex fuel technology rather than incrementally raising the ethanol percentage in petrol to E25 or E30. "The automotive industry, Toyota, the government and other stakeholders are in one voice that the way ahead now is clearly the flex-fuel vehicle," Gulati asserted.
He highlighted a significant practical hurdle with gradually increasing blends: the impact on older, legacy vehicles. Each change in the fuel blend would necessitate retesting and re-homologation for these vehicles, creating recurring compliance challenges for owners and authorities.
Taxation and Pricing: Key to Adoption
Gulati pinpointed two critical levers for making FFVs viable in the Indian market. First, he called for a review of the tax structure. He noted that with the compensation cess expiring, the Goods and Services Tax (GST) now varies only by vehicle size (18% for small cars, 40% for large ones), irrespective of technology, except for battery electric vehicles which enjoy a 5% slab.
"For all other clean energy technologies, there will have to be some mechanism that the government will have to think about so that it can create merit-based taxation for clean technologies," he stated, pushing for a level playing field.
Second, he emphasized the need for differential pricing, citing the successful Brazilian model. "In Brazil, there is a law that says ethanol [E100] should be 33 per cent cheaper compared to gasoline with 30 per cent ethanol blend [E30]. This naturally drives the cost-conscious consumers to choose E100," Gulati explained. Implementing a similar price advantage in India could be a game-changer for consumer adoption.
Context and Industry Crossroads
This push for flex fuel comes against the backdrop of India's 2023 mandate requiring all new petrol vehicles to be E20 compatible. The move to E20 had initially raised concerns among owners of pre-2023 models, who reported a noticeable drop in fuel efficiency, as their vehicles were not designed for the higher blend. There were also worries about potential engine corrosion.
The government, however, has maintained that studies show the efficiency drop is marginal and that fuel blending is crucial for energy security, farmer income, and environmental sustainability.
Currently, no carmaker sells FFVs in India due to their higher upfront cost compared to conventional petrol cars. However, companies like Toyota have the technology ready. This advocacy also highlights a broader ideological clash in the automotive sector's future, with some manufacturers betting heavily on pure electric vehicles (EVs), while others, like Toyota, see flex fuel hybrid vehicles as a more pragmatic and immediately scalable clean technology solution for the Indian context.
