Ethanol Blending in India: Building an Independent Sector View

Sparsh developed this view independently, outside of any client engagement, as part of how he stays current on sectors beyond his primary focus at McKinsey.

The starting point was the mainstream narrative: ethanol blending in India was framed as a renewable win, a way to reduce the country's import bill and cut emissions. He read widely across the optimistic case, including policy announcements and industry commentary.

Rather than accepting that framing, Sparsh traced the supply chain upstream. He looked at where India's ethanol actually comes from: primarily rice, maize, and sugarcane. All three are water-intensive crops. That single observation reframed the question. Scaling ethanol blending at the pace being discussed would require a significant increase in crop cultivation, which in a water-stressed country like India carries real risks of water scarcity and, further out, food security pressure.

He also examined the demand-side constraints: the efficiency trade-off in vehicle mileage that comes with higher ethanol blends, and the criticism that had emerged from automotive and consumer quarters.

The conclusion Sparsh reached was that the renewable story was real but incomplete. The structural constraints on the supply side, particularly water intensity, were not being priced into the optimistic forecasts. His view: ethanol blending has a role, but the pace of scaling is constrained by agricultural and water realities that the headline narrative underweights.