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India E85 Fuel Policy:  The ongoing US-Iran war has disrupted oil and gas supplies across the globe, which has resulted in rising crude oil prices. While this might not be a trouble for India as of now, it might become a pressing issue in the near future. The Indian government is planning on reducing its dependency on the Middle East, and a draft policy for E85 fuel might soon be released. All of these factors present EVs as a very reliable option for the future. Here’s Why.

US-Iran War & Fuel Supply

The ongoing US-Iran war has resulted in the blockade of one of the most significant waterway passes in the world, the Strait of Hormuz. The Strait of Hormuz is a narrow waterway that connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. Around 20 per cent of the global oil and gas supply passes through this passage on a daily basis. The blockade of the Hormuz has resulted in a disruption in the supply. While India has managed to secure selective passage for its vessels, it is highly impacted by the blockade, as per several reports.

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India To Reduce Dependence

India imports more than 88 per cent of its crude oil from the world. The Indian government plans to reduce its dependency and has opted for Ethanol blending as an alternative. The government rolled out E20 fuel (20 per cent Ethanol Blended petrol) in 2025. Now, the government is planning to soon release a draft policy for E85 fuel. The E85 simply means that the percentage of Ethanol in such fuel will be around 85 per cent, and only a smaller, 15 per cent, share of it will be petrol.

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India Moves To E85: Challenges & Car Prices

As mentioned earlier, the government recently rolled out E20 fuel across the country, and it is now planning to draft a policy for E85. The adoption of E85 fuel presents several challenges related to infrastructure and fuel efficiency. To use E85 fuel, vehicles will need a redesigned Flex-Fuel engine. While the E85 fuel could be cheaper per litre, the engines will be required to be redesigned to burn the fuel. This will increase the car prices in the country.

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Why EVs Are Better Alternatives?

The electric vehicle market in India is rapidly growing and is expected to grow to a Rs 20 lakh crore market by 2030. According to the Federation of Automobile Dealers Associations in India, around 2 lakh EVs were sold in the country in FY26, whereas a total of 1.09 lakh units were sold in the country in the previous fiscal year. Ongoing disruption in the fuel supply and the country’s move toward E85 further present EVs as a better alternative. Here’s how:

Government’s Push For EVs

As mentioned above, the electric vehicle market in India is growing significantly, and the government is also pushing towards EVs to achieve net zero emissions by 2070, reduce dependency on oil imports, and tackle air pollution. The government is providing financial incentives to consumers, as well as manufacturers, to increase the number of EVs while creating demand for the produced vehicles. Initiatives such as PM E Drive, PLI, and reduced taxation make EVs more lucrative. Additionally, several states are providing additional financial benefits for EVs, which makes them more attractive to consumers.

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EVs Are Becoming More Affordable

While electric vehicles were looked at as more expensive and premium options a few years back, consumers can now easily afford an electric vehicle. The most affordable electric car in India is the MG Comet, and its BaaS (Battery as a Service) variant is priced at Rs 4.99 lakh (ex-showroom). Notably, the most affordable electric car in India is priced at Rs 3.50 lakh (ex-showroom). Popular EVs such as the Tata Punch EV, Tata Tigor, and Tata Tiago EV are priced under Rs 10 lakh, which makes the EVs more attractive as an alternative to ICE vehicles.

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The ‘Range Anxiety’ Is Dissipating

The Range was the largest factor making consumers anxious about EVs. As we are aware, the charging infrastructure in India is in its initial stages, and it will need some time to be fully developed. Given the situation, Indian consumers need EVs that provide adequate range. Now, even the most affordable cars in India provide a minimum 200 km real-world range, which is sufficient for daily urban use. EVs that cost more than 10 lakh provide more than 350 Km of real-world range, and EVs with a cost of Rs 20-30 lakh easily provide 500 Km or more range. This has dissipated the ‘range anxiety’ and given a push to the EV demand. The same reason has also made the EVs more attractive.

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EVs & US-Iran War

While EVs are now more affordable, have more range, and have emerged as a significant alternative to ICE vehicles, the US-Iran war has also impacted EVs. The blockade of Hormuz has also resulted in the disruption of essential materials required for the battery of EVs. This has resulted in an increase in input prices and costs, and the longer the war lasts, the more costly the EVs might become.


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