Page 51 - Policy Economic Report- June'26

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Remarking that India’s flex-fuel journey draws inspiration from proven global success while being tailored
to the domestic aspirations and strengths, the Minister noted that Brazil has demonstrated the long-term
viability of higher ethanol blends over decades, with over 80% of its light vehicle fleet currently operating
on flex-fuel technology.

The Minister stated that the recent launch of flex-fuel compatible two-wheelers, four-wheelers and now
E85 fuel marks India’s transition from pilot initiatives towards a structured national flex-fuel ecosystem.
He urged States to support the transition through enabling taxation policies for E85 fuel and flex-fuel
vehicles.

Addressing the misconceptions surrounding ethanol-blended fuels, the Minister noted that:

• E85 fuel is meant exclusively for specially designed flex-fuel vehicles, not for normal petrol
vehicles.

• Since E20 became the standard fuel across the country, there has not been a single reported
case of engine failure or vehicle breakdown attributable to ethanol blending.

• E20-compatible vehicles deliver improved acceleration and better ride quality, particularly
under city driving conditions.

• Usage of E20 fuel has no impact on the validity of vehicle insurance in India.

The Minister further noted that flex-fuel vehicles remain highly competitive with EVs due to their lower
acquisition costs and ability to leverage existing fuel infrastructure. He noted that while EV technologies
rely significantly on imported batteries and critical minerals, E85-powered vehicles run on domestically
produced ethanol derived from the sweat and toil of Indian farmers.

Concluding his remarks, the Minister said, every litre of ethanol replaces imported fossil fuel and every
drop of E85 carries with it the spirit of Atmanirbhar Bharat. “?? ??? ??? ???? ??, ?? ??? ??? ????? ????? ???,
?? ??? ??? ???? ?? ?????? ??” !

4. Government notifies control order to curb black marketing and hoarding of diesel by unscrupulous
elements

The Ministry of Petroleum and Natural Gas has notified the "Motor Spirit and High-Speed Diesel
(Temporary Regulation of Supply through Retail Outlets) Order, 2026" to curb black marketing and
hoarding of diesel by unscrupulous elements. These regulations are temporary measures, initially valid
for up to 90 days, ensuring diesel availability to all retail consumers.

The current situation is one of uneven extraordinary demand growth in some retail outlets due to shifting
of bulk diesel volume to PSU Oil Marketing Retail Outlets. This is driven by industrial and direct or
institutional and commercial consumers who have been shifting their procurement from their dedicated
consumer pumps to retail outlets due to the difference between bulk and retail diesel prices. The other
reason is that private Oil Marketing companies’ sales exhibited a decline of around 58% in HSD sales during
May 2026 due to higher prices fixed by them.

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