Nitin Gadkari, the Union Transport Minister, has urged vehicle manufacturers to accelerate the transition to cleaner fuels, but this faces the toughest reality checks. His assertion that petrol and diesel have no future is a clear signal of a policy push for alternative fuel and phasing out internal combustion engines that run on fossil fuel; the gap between policy goals and availability of alternative fuel continues to widen. The vehicle manufacturers will grapple with the chicken and egg dilemma, as they will not be keen to go for mass production of flex-fuel vehicles, which are designed to run on more than one fuel, usually vehicles running on petrol blended with ethanol, without adequate availability of ethanol or other alternative fuel to be used for blending. The draft notification issued by the Ministry of Road Transport and Highways for higher ethanol-blended fuels – E85 (85% ethanol) and E100 (near 100% ethanol) – to push beyond the current E20 norm. While it is mandatory for petrol pumps to sell petrol blended with 20% ethanol, and new vehicles manufactured after April 2023 are fully compatible with E20 fuel, crores of vehicles manufactured before this timeline are not fully optimised for E20, and users claim to experience a drop in fuel efficiency, and their concern over long-time engine wear remains unaddressed. Advancing E20 rollout from the 2030 target year to 2025-26 has already mounted pressure on sugarcane and maize/rice production for their use in ethanol production, raising questions over the feasibility of E85 or E100 rollout. Besides, there is an element of uncertainty in the availability of ethanol produced from sugarcane and maize/rice in the event of crop failures, as these are climate-sensitive crops. The states must prioritise procurement of a sufficient quantity of food grains for ensuring food security over biofuel production. Automakers cannot ignore such realities while finalising their investment decisions on manufacturing vehicles fully compatible with alternative fuels pushed by the government. Pushing Electric Vehicles (EVs) to replace petrol and diesel vehicles, without higher shares of renewables in the energy mix, also grapples with an environment-reality paradox. While the transition is aimed at reducing carbon emissions and is vital from the point of climate action goals, the harsh reality that coal continues to account for 69-72% of total electricity generated in the country explains why mere replacement of petrol and diesel vehicles with EVs is not going to address the issue of carbon emissions. The rise in demand for electricity to power more charging points for the smooth movement of EVs will only lead to more burning of coals and, hence, more carbon emissions, which will negate the gains of the replacement of the fossil-fuel vehicles. The high upfront cost of EVs, in addition to range anxiety of vehicle owners over a lack of adequate charging stations, has created bottlenecks in the transition to EVs on a mass scale. The government’s push for biofuels and EVs in the transport sector is driven by its ambition to cut the crude import bill, which is estimated at Rs 22 lakh crore annually. The country’s vulnerability to crude oil price volatility and increasing burden of the import bill have deepened under the geopolitical uncertainties triggered by the ongoing West Asia crisis disrupting supplies. As the country imports 85% of its crude oil requirement, such geopolitical uncertainties coupled with the weakening of the rupee against the dollar precipitates the energy crisis by further increasing the crude oil import bill. Transitioning to biofuel and EVs to cut down the import bill sounds ideal because of the deepening crisis, but a hasty move to rush the regulatory measures for the transition without first ensuring availability of alternative fuel could prove to be disastrous. A pragmatic solution to the problem could be gradually reducing the demand of the fossil-fuel-run vehicles by strengthening the public transport system. By focusing on the transition of public transport vehicles to EVs and biofuels or flex-fuel vehicles, the government can create an ecosystem in which more people will start using the public transport for daily commuting and plan the purchase of a new vehicle which is fully compatible with the cleaner fuel standard set under the regulatory regime. Such an approach can go a long way in achieving the twin goals of cutting down the crude import bill and transitioning the vehicle manufacturing ecosystem to manufacture vehicles that run on cleaner fuels. This can be possible only when the States focus on strengthening public transport systems that run on alternative biofuel, blended fuels or batteries so that the overall baseline demand for private vehicles remains in check. Vehicle manufacturers, however, will resist any dampening of demand for private vehicles through a strengthening of public transport, as it will affect their business model of selling more vehicles every year. The pragmatic solution to the problem lies in incentivising automakers to produce cleaner vehicles and rewarding companies that are keen to manufacture public transport vehicles.