New Delhi: The global energy crisis caused by the West Asia conflict is likely to accelerate the adoption of electric vehicles (EVs) in India and fast-track the government’s push to increase ethanol blending in petrol, according to industry executives and analysts.
Since the conflict began last month, sending crude oil prices soaring, EV makers such as Vietnam’s and homegrown Ola Electric have offered discounts to wean consumers away from internal combustion engine (ICE) vehicles that run on diesel and petrol, with analysts saying the energy crisis could push fence-sitters towards EVs.
The crisis has also renewed focus on the Centre’s plans to go beyond the 20% ethanol blending in petrol, with executives indicating that higher blends and flex-fuel vehicles may see faster rollouts as they can cut the country’s imports of crude oil.
According to analysts at Nomura, crude oil price rise due to the current crisis can make the total cost of ownership equation even more attractive for electric vehicles, which can boost EV sales in the short term.
“One beneficiary of higher oil prices could be a quicker shift in consumer sentiment towards EVs. Thus, EV [players] are likely to benefit,” Kapil Singh and Siddhartha Bera of Nomura wrote in a 9 March note.
Retail fuel prices have remained steady so far, but risks of an increase persist if the conflict drags on, according to experts.
EV sales in the country rose 77% year-on-year in calendar 2025 to nearly 177,000 units, with their share in total sales reaching 4%. EVs attract a goods and services tax (GST) of 5% and are typically costlier than ICE vehicles. However, the government reduced GST on ICE vehicles last year from 28–50% to 18–40%, widening the price gap with EVs and reducing their relative cost advantage. The energy crisis could just be the trigger for customers to switch to .
Auto and allied industry executives said that the crisis should prompt a diversification of the fuel basket in such a way that cuts India’s dependence on crude imports.
“We expect the government to expedite the work on increasing blending in Ethanol once the West Asia crisis is over. It will help cut dependence on crude oil imports. This can be done in a gradual way of moving to E22, E27 and then further which can ease the imports further,” Deepak Ballani, Indian Sugar and Bio-energy Manufacturers Association, told Mint.
“We also think work on flex-fuel vehicles will also increase once the direction on the way forward will be clear. A report is expected from the government on this soon,” Ballani said.
Flex-fuel vehicles are those that can run on any amount of ethanol blend, including 100% ethanol. India began an ethanol blending programme in 2003 to utilise surplus sugarcane-based feedstock and reduce dependence on crude oil imports.
“The current geopolitical situation has shown how critical energy security and self-reliance are, whether from oil dependence on the Middle East or rare earth dependence on China. While increasing electrification will help, a large majority of vehicles will still remain unaddressed. Mathematically, the immediate and highest impact on energy security can be achieved by increasing biofuels, hybridization of ICE vehicles, or simply by lightweighting and encouraging compact vehicles,” a Maruti Suzuki spokesperson said.
Queries sent to carmakers Hyundai Motor India, Tata Motors Passenger Vehicles, and Mahindra and Mahindra, and two-wheeler makers Bajaj Auto, Hero MotoCorp, TVS Motor Company, Honda, and Ather Energy remained unanswered.
India spent $137 billion importing 234 million tonnes of crude oil in FY25, according to data from the Petroleum Planning and Analysis Cell. Through ethanol blending, the government has save approximately ₹1.44 trillion ($16 billion) worth of foreign exchange and substituted 24.5 million tonnes of crude oil in the past 11 years since 2014, as per estimates by the Society of Indian Automobile Manufacturers (Siam), Federation of Indian Petroleum Industry (Fipi), and vehicle testing agency Automotive Research Association of India (ARAI).
Currently, no carmaker sells a flex-fuel vehicle. Higher blending of ethanol has remained a contentious issue in the Indian market as customers complain of lower fuel efficiency due to higher ethanol blends.
Other experts say that the immediate beneficiaries of the global energy crisis and rising oil prices will be electric vehicles, given the wider availability of models, unlike flex-fuel vehicles and higher ethanol blending, which remain at exploratory stages.
“Many fencesitters are taking the plunge into EVs now. No other clean fuel alternative is currently seeing the trend,” Subhabrata Sengupta, partner at Avalon Consulting, said.
Some companies are rushing to catch this trend. VinFast said in a 10 March statement that a ‘trade gas for electric’ initiative could encourage consumers to shift to EVs amid a volatile outlook on crude oil. Under the initiative, consumers can exchange their petrol or diesel vehicles for electric ones, with additional discount on the EV.
“The special ‘Trade Gas for Electric’ program launched in March across four key markets is VinFast’s timely response to geopolitical volatility that is affecting socio-economic conditions in many countries around the world,” Duong Thi Thu Trang, deputy chief executive officer of global sales at VinFast, said in a statement.
VinFast’s lead was immediately followed by on 14 March, which began an “EndICEAge” campaign to boost EV sales through steep discounts.
An Ola Electric spokesperson said during the beginning of the campaign, “For decades, India has been stuck in the petrol cycle, rising fuel prices, constant visits to petrol pumps, and a mobility system built on outdated technology. With #EndICEAge, we’re inviting riders across the country to break free from petrol dependency and move to electric.”
