INDIA FLEXFUEL CARS MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2023 - 2030)

India Flexfuel Cars Market Size and Trends

India flexfuel cars market size was estimated to be valued at US$ 611.8 Billion in 2023 and is expected to reach US$ 1,627.4 Billion by 2030, exhibiting a compound annual growth rate (CAGR) of 15% from 2023 to 2030.                     

India Flexfuel Cars Market Drivers:

• Supportive government policies and regulations: The Indian government has implemented policies such as the Ethanol Blending Program and Bharat Stage VI emission norms to boost adoption of cleaner fuels and vehicles. The target of 20% ethanol blending in petrol by 2025 will necessitate compatibility of the vehicle fleet with higher ethanol blends. This has encouraged automakers to develop flexfuel models. The government has also provided tax incentives for flex-fuel vehicle purchases and lowered GST on such models. Further policy support can accelerate consumer adoption of flexfuel cars. According to  the Society of Indian Automobile Manufacturers (SIAM) data, total flex-fuel cars sold rose from around 4,700 units in 2020 to over 16,000 in 2021. This growth trajectory is expected to steepen further with the nationwide E10 rollout just months away.
• Cost benefits for consumers: With rising petrol and diesel prices, flexfuel cars provide significant fuel cost savings for consumers, as ethanol costs 20-50% lower. Flexfuel models have gained popularity in markets like Brazil and U.S. due to their economic value proposition. If higher ethanol blends become widely available in India, flex-fuel cars would offer substantial savings on fuel bills for price-sensitive Indian consumers. This cost incentivization can boost consumer demand. According to the data provided by the Ministry of Petroleum and Natural Gas, Government of India, molasses-based distillery capacity for producing bioethanol in India increased from 206 crore liters in 2020 to around 250 crore liters in 2022.
• Developments in engine technologies: Automakers are investing in research and development (R&D) to develop optimized engines for ethanol compatibility. This includes lightweight parts, corrosion-resistant materials, advanced fuel injection and engine control systems. With solutions for cold start, drivability and emissions challenges, new engines can deliver seamless flex-fuel performance. Original equipment manufacturer (OEM) partnerships with technology firms are expediting development of robust flex-fuel powertrains suited for Indian conditions. As part of its National Biofuel Policy 2018, the government has set a target of developing a fleet of one million flex-fuel two and three wheelers in the country by Ministry of Petroleum and Natural Gas, Government of India 2023.
• Environmental sustainability: As compared to gasoline, ethanol reduces particulate, NOx and CO2 emissions. Wider adoption of ethanol-compatible vehicles hence supports India’s renewable energy and decarbonization goals. Younger and environment-conscious consumers are likely to prefer flexfuel cars that are aligned with sustainability values. Automakers can also meet tighter emission norms in the future by transitioning to flex-fuel models. According to International Renewable Energy Agency data, in 2021, India’s ethanol blending rose substantially from 0% in 2013 to 5% in 2020 and close to 10% in late 2021, indicating greater emphasis on sustainable transportation fuels.

India Flexfuel Cars Market Opportunities:

• Leadership in emerging market segment: As a first mover, Indian automakers have the chance to establish leadership in the nascent but high-potential flex-fuel segment. Early investments in R&D and capacity can help OEMs gain significant market share before global rivals intensify focus. Developing innovative and price-competitive flexfuel options for India's value-conscious buyers also allows capturing share. According to India's Ministry of Petroleum and Natural Gas, the government has set a target of supplying 20% ethanol blended petrol at all petrol pumps in India by 2025. This will create a thriving market for flexfuel vehicles that can make optimal use of the inexpensive and cleaner ethanol-gasoline mix.
• Export potential: India can also emerge as a manufacturing and export hub for cost-efficient flexfuel vehicles and components, servicing demand in Asia Pacific, Africa and Latin America. Export offerings that are tailored for price-sensitive emerging markets can further strengthen India's position in the global auto industry. According to data provided by the International Energy Agency (IEA), global ethanol production increased by 22% from 2017 to 2020. While the U.S.remains the top producer, output is growing rapidly in nations like India and Brazil to serve evolving clean transport policies.
• Transition to sustainable mobility: The pivot towards flexfuel vehicles can accelerate India's shift to sustainable mobility. This presents opportunities across the value chain, renewable fuel production, distribution infrastructure, end-use vehicular technologies, battery electric flex-fuel hybrids etc. Strategic investments to build a holistic ethanol ecosystem will cement India's leadership. According to data provided by  the International Energy Agency (IEA), global ethanol production increased by 22% from 2017 to 2020. While the U.S. remains the top producer, output is growing rapidly in nations like India and Brazil to serve evolving clean transport policies.
• Rural markets: Flexfuel vehicles supported by biofuels align well with India's focus on rural development and self-reliance. Ethanol production utilizing agricultural feedstocks provides income opportunities for farmers. Compatible vehicles can allow rural consumers to reap financial benefits. India can showcase biofuels integration with farm and transport sectors. According to the data provided by the Ministry of New and Renewable Energy, Government of India, production of fuel grade bioethanol in India increased from 38 crore litres in 2019 to 120 crore litres in 2021.

India Flexfuel Cars Market Trends:

• Partnerships on fuel availability and distribution: To ensure fuel supply for fleets, OEMs are entering partnerships with oil marketing companies to set up ethanol pumps and co-develop distribution infrastructure in India. Efforts are ongoing to achieve pricing parity between petrol and ethanol. More tie-ups can accelerate rollout of fueling stations. According to the data provided by the Ministry of Petroleum and Natural Gas, number of operational E85 pumps in India has increased from just 63 in 2019 to over 500 in 2022.
• Shared mobility and ride-hailing fleets: Players like Ola (Ola Cabs offers to book cabs nearby your location for best fares. For best taxi service at lowest fares,) and Uber (provides ride-hailing services, food delivery, and freight transport) are deploying EVs in their fleet. Shared mobility operators may adopt flexfuel models to reduce fuel costs. Partnerships with OEMs can optimize such vehicles for durability and low maintenance. Till2022, Ola has committed in transitioning its entire fleet to electric vehicles while also adding E20 (20% ethanol blended petrol) compatible vehicles. Uber too plans to have 50% of its corporate car leases in India by 2025.
• Two-wheeler flexfuel models: Two-wheeler OEMs like Hero MotoCorp (an Indian multinational motorcycle and scooter manufacturer), TVS (an Indian multinational motorcycle manufacturer) and Bajaj Auto (It manufactures motorcycles, scooters and auto rickshaws) have started testing flexfuel prototypes to enter this segment. Significant two-wheeler volumes will bolster ethanol demand. Affordable two-wheeler E85 options can make the benefits more accessible. According to the data provided by the Ministry of Petroleum and Natural Gas, Government of India, sales of ethanol blended petrol have increased from 38 crore litres in 2019 to 140 crore litres in 2022.
• Retrofit conversions: Companies are providing aftermarket conversion kits to modify existing vehicles to flex-fuel compatibility. These low-cost retrofits allow consumers to switch to ethanol blends while retaining petrol compatibility. According to the data provided by the Ministry of Road Transport and Highways, over 250,000 conversions to Compressed Natural Gas or Liquefied Natural Gas (CNG/LNG) had taken place in India till 2021 through recognized conversion centers.