New Delhi: The global energy crisis triggered by the West Asia conflict is likely to speed up the adoption of electric vehicles (EVs) in India and increase the momentum of the government’s efforts to boost ethanol blending in petrol, according to industry executives and analysts, Mint reported.
Since the conflict began last month and pushed crude oil prices higher, EV makers such as Vietnam’s VinFast and homegrown Ola Electric have introduced discounts to encourage consumers to shift away from internal combustion engine (ICE) vehicles that run on petrol and diesel. Analysts say the ongoing crisis could push undecided buyers towards EVs.
The situation has also renewed focus on the Centre’s plans to go beyond the current 20% ethanol blending in petrol. Industry executives indicate that higher blending levels and flex-fuel vehicles may be introduced faster, as they can help reduce the country’s dependence on crude oil imports.
Analysts at Nomura said rising crude oil prices could make EVs more attractive from a cost perspective, boosting sales in the short term. “Higher oil prices could lead to a faster shift in consumer sentiment towards EVs. As a result, EV players are likely to benefit,” analysts Kapil Singh and Siddhartha Bera said in a note dated 9 March.
Retail fuel prices have remained steady so far, but experts warn that the risk of an increase remains if the conflict continues.
EV sales in India rose 77% year-on-year in calendar year 2025 to nearly 177,000 units, with their share in total vehicle sales reaching 4%. EVs attract a goods and services tax (GST) of 5% and are generally more expensive than ICE vehicles. However, the government reduced GST on ICE vehicles last year from 28–50% to 18–40%, widening the price gap and reducing the cost advantage of EVs. Even so, the current energy crisis could act as a trigger for more consumers to switch.
Industry executives said the situation highlights the need to diversify fuel options and reduce dependence on crude oil imports. Deepak Ballani, director general of the Indian Sugar and Bio-energy Manufacturers Association, said the government is expected to speed up efforts to increase ethanol blending once the West Asia crisis stabilises.
He added that a gradual move towards higher blending levels such as E22 and E27 could help cut imports further. Ballani also said work on flex-fuel vehicles, which can run on any level of ethanol blend, including 100%, is likely to pick up once policy clarity emerges.
India launched its ethanol blending programme in 2003 to use surplus sugarcane-based raw material and reduce reliance on imported crude oil.
A spokesperson for Maruti Suzuki said the current geopolitical situation has highlighted the importance of energy security and self-reliance. While electrification will help, a large number of vehicles will still rely on conventional fuels. The spokesperson added that increasing the use of biofuels, hybrid vehicles, and lightweight, compact cars could have an immediate impact on reducing fuel dependence.
Queries sent to several automobile and two-wheeler manufacturers, including Hyundai Motor India, Tata Motors Passenger Vehicles, Mahindra and Mahindra, Bajaj Auto, Hero MotoCorp, TVS Motor Company, Honda, and Ather Energy, did not receive responses.
India imported 234 million tonnes of crude oil worth $137 billion in FY25, according to data from the Petroleum Planning and Analysis Cell. Over the past 11 years since 2014, ethanol blending has helped save about ₹1.44 trillion in foreign exchange and replaced 24.5 million tonnes of crude oil, according to estimates by industry bodies.
At present, no carmaker in India sells flex-fuel vehicles. Higher ethanol blending has also faced resistance from some consumers, who report lower fuel efficiency with higher ethanol content.
Experts said electric vehicles are likely to benefit the most in the near term, as more models are already available in the market, unlike flex-fuel vehicles and higher ethanol blending, which are still at early stages.
“Many undecided buyers are now choosing EVs. No other clean fuel alternative is seeing a similar trend,” said Subhabrata Sengupta, partner at Avalon Consulting.
Companies are moving quickly to tap into this trend. VinFast announced a “trade gas for electric” initiative on 10 March, allowing customers to exchange petrol or diesel vehicles for EVs with additional discounts.
The company said the programme is a response to global uncertainty affecting fuel prices. Ola Electric followed with its “EndICEAge” campaign on 14 March, offering discounts to boost EV adoption.
An Ola Electric spokesperson said the campaign aims to encourage consumers to move away from petrol-based mobility and adopt electric vehicles.
