Rethinking India’s E85 Ambition through 3 Fs of Fuel, Federalism and the Future

IV. The Resource Scarcity Paradigm: Water, Land, and Food

The environmental case for E85 is usually presented as self-evident: replace fossil fuel with a domestic renewable, reduce emissions, and cut import costs. But sustainability cannot be measured only at the tailpipe. A serious lifecycle assessment requires examining the entire production chain, and that assessment is considerably less favourable than blending-target advocates acknowledge.

India’s ethanol programme depends substantially on sugarcane. Sugarcane requires between 1,500 and 2,000 litres of water per kilogram of output among the highest of any commercial crop. The Central Ground Water Board’s 2022 assessment placed Maharashtra’s Marathwada region and significant portions of Karnataka in the ‘over-exploited’ category for groundwater extraction. These are precisely the states driving ethanol expansion. A fuel promoted as environmentally sustainable depends on a production model that is accelerating pressure on irreplaceable aquifers.

The constitutional framework assigns this concern legal force. The State acts as a trustee of natural resources under the Public Trust Doctrine, and the precautionary principle as applied in M.C. Mehta v. Kamal Nath ((1997) 1 SCC 388) and A.P. Pollution Control Board v. Prof. M.V. Nayudu ((1999) 2 SCC 718) shifts the burden of proof entirely onto the proponents of expansion to demonstrate that their activities will not irreversibly deplete critical groundwater reserves. The Union Government’s current approach, which announces blending targets without a corresponding groundwater impact assessment framework, fails to discharge that burden.

The food security risk operates through a specific and demonstrable mechanism. As ethanol production becomes more lucrative relative to sugar, market incentives will push sugarcane cultivators and mills toward fuel diversion. India’s experience between 2021 and 2023, when the government periodically restricted B-heavy molasses diversions to ethanol to protect sugar availability, illustrates the conflict in real time. Molasses and sugar derivatives are also critical inputs for pharmaceuticals, chemicals, and industrial solvents. The risk is not hypothetical: the governance mechanism to prevent destabilising diversion does not currently exist at the scale E85 demands.

Second-generation biofuels, derived from agricultural waste rather than food crops, offer a partial resolution. The government’s own National Policy on Biofuels identifies this pathway. The problem is that second-generation technology remains expensive, commercially unproven at scale in India, and dependent on supply chains that have not been built. Counting on a technology transition that has not occurred to resolve a resource conflict that is already active is not a governance strategy.

V. Labour, Gender, and the Human Cost of the Ethanol Supply Chain

Women constitute a large share of the sugarcane harvest workforce in Maharashtra and Karnataka, and they bear a disproportionate share of the occupational health burden of expansion. This is not simply a marginal welfare observation. This is where we begin our construction of the labour facets of an E85 governance framework.

Sugarcane harvesting is seasonal migrant labor involving informal contracts and physical strain. 700,000 to 900,000 seasonal migrants, most from drought- afflicted districts of Maharashtra, migrate during the harvest season. Poor conditions of migrant labor include below minimum wages, no creche facilities, insufficient drinking water at the worksite, and respiratory disease from exposure to bagasse. Increasing demand for ethanol means demand for bagasse, means demand for faster harvesting, means greater respiratory disease.

The requirements of our Constitution must be followed. In the People’s Union for Democratic Rights v. Union of India (1982) 3 SCC 235 case, it was held that the absence of payment of minimum wages means that forced labour exists under Article 23. In Bandhua Mukti Morcha v. Union of India (1984) 3 SCC 161, it was observed that the right to live a life free from exploitation has to be accomplished by the State as per the Directive Principles. And in Vishaka v. State of Rajasthan (1997) 6 SCC 241, it was ruled that employers have to abide by the provisions about adherence concerning sex.

The feature of federalism is very important, especially in relation to the subject of labour regulation, which is a concurrent subject in the Seventh Schedule. Even though the Union Government can set the minimum standards, it is the States that implement the laws. In Maharashtra, the Labour Department is not effective in conducting inspections and implementing its mandate. The improvement of the department’s capacity is crucial in ensuring compliance.

VI. The Federalism Challenge: Why It Is the Master Problem

The federalism challenge is not one problem among several. The compliance of systems that govern water, labor, technology, and food security depends on the structural dimensions of governance. Hence, the structural condition must be analyzed first.

Biofuel-related policy is not only a matter of the Union or the State; it falls into more than one entry within the Seventh Schedule of the Constitution. The Union is competent in matters relating to petroleum and energy policy through Entry 53 of List I, where it establishes the National Policy on Biofuels and works on ethanol blending projects across India. However, E85 is produced in relation to factors placed under Entry 14 (Agriculture), Entry 17 (Water) and Entry 18 (Land) of List II, since various agricultural practices, irrigation, groundwater management and land use are crucially governed by the agricultural states and would require the involvement of the States in revenue sharing such that farmers will continue to benefit from this biofuel.For example, on one hand, it will help us to reduce the Current Account deficit by reducing our bills for Crude Imports, besides fostering and redeeming our commitment as a founder of the Global Biofuels Alliance (GBA) and concomitantly benefiting only a few States who lead in the sugar production across the nation, as compared to others, thereby creating another regional fiscal imbalance akin to Green Revolution.

Cooperative federalism has consistently been recognised by the Supreme Court as a guiding constitutional principle when it comes to the clash of legislative competencies. Hence, a viable E85 framework has to institutionalise Centre-State coordination in relation to feedstock planning, groundwater preservation, and labour welfare measures, as well as in respect of environmental regulation. Thus, E85 can be viewed not only as an energy policy but as the implementation of a constitutional mechanism that must ensure that national aspirations take into account regional ecological and developmental concerns. The situation developed by Maharashtra and Karnataka vividly highlights the problem. Maharashtra is one of the major sugarcane producers in India, while at the same time being one of the worst-affected states in terms of groundwater shortage. The promotion of ethanol blending will encourage even more sugarcane production in Marathwada, a drought-prone area suffering from the shortage of water. The increased amounts of groundwater diverted for sugarcane production will lead to increased pressure on the river basins shared with Karnataka. The lessons that can be drawn from the Cauvery dispute are that the Court confirmed in State of Karnataka v. State of Tamil Nadu (2018) 4 SCC 1 that effective governance of shared water systems requires the establishment of institutional arrangements among the parties.

The Supreme Court’s emphasis on cooperative federalism affirmed in S.R. Bommai v. Union of

India (1994) 3 SCC 1 does not establish the resolution of a problem; it sets out the solution space. Adoption of a new institution is required. In order to achieve the above, an efficient mechanism is necessary. This is a critical point since, up to now, there is no institutional framework that will allow the Union to agree on and develop blending goals in relation to water, labour and agriculture. The National Biofuels Policy does not provide such a framework. There are two matters brought about by the E85 case which still exist. This means that the first matter that ought to be avoided is constitutional overlapping.

VII. The Regulatory Framework: Closing the Governance Gap

The governance deficit is not uniformly distributed. Some gaps are more foundational than others, and the sequencing of regulatory reform matters as much as its content. An E85 governance framework must be built in order: the Centre-State coordination architecture must come first, because without it, every downstream regulatory instrument- vehicle standards, water monitoring, labour compliance lacks the enforcement pathway to reach implementation.

• Priority One: A Formal Centre-State Coordination Mechanism

The Union Government must establish a statutory E85 Governance Council with mandatory state participation, incorporating the Ministries of Petroleum, Agriculture, Jal Shakti, Labour, and Environment alongside state-level counterparts from ethanol-producing states. This body must have authority to negotiate and enforce state-specific blending timelines calibrated to groundwater capacity, labour compliance status, and food security buffers, not uniform national targets applied regardless of local conditions. A long-term E85 strategy built without this structure is built on sand.

• Priority Two: A Lifecycle Sustainability Framework with Binding Metrics

The sustainability framework must adopt a full lifecycle approach, measuring water consumption, land use change, and ecological externalities across the entire production chain, not only tailpipe emissions. Critically, this framework must establish binding groundwater thresholds: districts classified as ‘over-exploited’ by the Central Ground Water Board must be ineligible for expanded sugarcane cultivation tied to ethanol mandates until aquifer recovery targets are met. This converts the precautionary principle from a constitutional aspiration into an operational constraint.

• Priority Three: Flex-Fuel Vehicle and Fuel Quality Regulation

The Bureau of Indian Standards, in coordination with the Ministry of Road Transport, must establish mandatory flex-fuel vehicle certification standards, high-ethanol fuel quality parameters, and clear liability allocation between fuel producers, vehicle manufacturers, and retailers. In relation to consumer protection, it would be prudent to insist on ensuring clear regulations so that appropriate rules are put in place at the beginning of technology introduction to avoid getting regulations after a series of engine crashes have resulted in lawsuits.

• Priority Four: Labour Governance Integration into Biofuel Regulation

Labour governance must be included as an identifiable part of licensing of the ethanol supply chain and not simply as an issue to be considered. The Union Government must come up with amendments under the Inter-State Migrant Workmen Act and other similar laws (including new labour codes) to ensure compliance standards that contractors must continue to observe when dealing with sugarcane harvesters before proceeding to enter into offtake contracts with the Oil Marketing Companies. The need for gender-specific protections, provision of creche services, gender-based sanitation, and restricting the presence of kids among those who are in the process of migrating must be included in offtake contracts as obligations since they cannot be described as aspirations insofar as application of law is concerned.

• Priority Five: Binding International Commitments Through Multilateral Frameworks

India needs to pursue the inclusion of GBA sustainability criteria in binding international instruments, agreements under UNFCCC, ratifications of ILO conventions, and bilateral treaties with partner countries. Once adopted, India would need to implement the obligations through domestic law-making to make it legally binding. The GBA would be transformed from being a statement of intent to become a source of legal obligation.

VIII. Conclusion: Close the Governance Gap First

Ethanol production in India is at a crucial juncture. The illustration of E20 shows us that bold government initiatives and actions are capable of effecting fuel changes. More action must be taken for the realisation of E85. The realisation of E85 will have an impact on food security, water security, job conditions, and the transport sector. It will need a significant level of cooperation between the federal government and state governments, as stipulated in the Constitution. Federalism is a type of governance that has the highest lack of efficiency within its most primitive form. While the federal government has specific objectives for ethanol blending, the question of how to address groundwater issues, conduct wage negotiations, and handle conflicts between states will require a framework for government interaction. The message Brazil has for India on this topic is straightforward. Safe transitions to alternative fuels are possible when a government has the appropriate infrastructure in place. Brazil’s government announced ethanol as a target, but it spent 30 years building infrastructure and developed a legal, regulatory framework. The time to start that process is now for India.