Consumers Should Not Pay Higher Taxes for Clean Tech

India is working on Ethanol 2.0, an ambitious plan to expand biofuel-petrol blending beyond 20 percent and potentially move to 100 percent ethanol-fired vehicles. The government claims that EBP20 (petrol with 20 percent ethanol blending) has led to billions of dollars in gains to farmers and savings on fuel imports. But a sequel to this will not be easy unless India's automotive sector cooperates and makes flex-fuel vehicles. Toyota Kirloskar Motor country head Vikram Gulati tells S Dinakar in an interview in New Delhi how flex-fuel vehicles can leave a mark on India's ethanol economy and what needs to be done to get these on roads. Edited excerpts:

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What are the challenges in moving beyond EBP20?

First, E20 (20 percent ethanol) is more relevant to the automotive industry than other sectors. The reason is that material compatibility issues begin to arise beyond a 10 percent ethanol blend. Ethanol is much more corrosive, so it is essential to ensure that the engine, fuel pipeline, and all other components sensitive to higher ethanol blends are designed to withstand the effects. Proper material compatibility must already be in place.

What about ethanol availability to meet higher blending ratios?

Not only do we have sufficient ethanol for E20, but we also have the potential to go beyond that. This expansion will come from second-generation ethanol production.

2G ethanol seems a bit expensive at present...

It is a bit expensive, but with suitable technological evolution and incentives through policy mechanisms, it will become economically viable. Even if we don't go there, even with 1G, we have a huge surplus beyond E20. That is where flex-fuel engine vehicles come in.

Like in Brazil, right?