Union Minister for Road Transport and Highways Nitin Gadkari has called for a wider diversification of India’s agricultural sector into energy production, citing the country’s Rs 22 lakh crore annual fossil fuel import bill and the need to develop indigenous alternatives. He further expressed his wish to bring green hydrogen production costs down from USD 5 per kg to USD 1 per kg as India expands its alternative fuel ecosystem.
Addressing the KPMG’s Enrich 2026 Forum, Gadkari said agriculture could become a major source of energy through ethanol, compressed biogas (CBG), bio-bitumen and other biofuels. He said the approach would reduce dependence on imported fuels while creating additional income opportunities for farmers.
“Today, we have imports of fossil fuels costing Rs 22 lakh crore. This is a big challenge for India, not only from the economic point of view but also for ecology and the environment. Our policy is import substitution, cost-effective, pollution-free and indigenous. We need to develop alternatives that can reduce our dependence on imported fuels,” Gadkari said.
Ethanol Adoption Expands
Highlighting the expansion of ethanol blending in the transport sector, Gadkari said approximately 20 crore two-wheelers and four crore four-wheelers were using E20 fuel blends. He said manufacturers including Tata Motors, Mahindra, Toyota, Suzuki and Hyundai were preparing to introduce flex-fuel vehicles capable of operating on higher ethanol blends.
Gadkari said he would unveil Toyota’s Innova flex-fuel vehicle in November, which can operate on 100 per cent bio-ethanol. He said the vehicle had been with him for approximately one-and-a-half years and could operate on bio-ethanol as well as petrol. Comparing the economics of alternative fuels, Gadkari said ethanol would cost around Rs 75 per litre against petrol at approximately Rs 120 per litre. He also cited an equivalent running cost of Rs 25 per litre for the ethanol-powered Innova.
He said ethanol production could use multiple agricultural feedstocks, including corn, broken rice, sugarcane juice, molasses and bamboo. Gadkari also referred to the potential of isobutanol as an alternative fuel and said trials were underway to assess its blending with diesel.
3,000 CBG Plants Registered
Gadkari highlighted the potential of agricultural residue as a feedstock for compressed biogas production, particularly in states such as Punjab and Haryana, where he cited 280 lakh tonnes of available biomass, including rice straw. “Farmers are burning this residue, which is one of the reasons for air pollution in Delhi. We have registered around 3,000 CBG plants, of which 280 have started operations. Five tonnes of rice straw can produce one tonne of bio-CBG,” Gadkari said.
He called for greater research into biomass productivity and technologies that could increase methane generation from agricultural residue. He also said farmers should become contributors to the country’s energy requirements alongside their traditional role in food production.
Scrappage Policy To Lower Auto Component Costs By 30 Per Cent
The government’s vehicle scrappage policy could reduce automobile component costs by 30 percent through the recovery and reuse of materials such as aluminium, copper, plastic and rubber from end-of-life vehicles, Gadkari said. He said the availability of these materials at lower costs could improve the competitiveness of domestic automobile manufacturing. India’s automobile industry has expanded significantly over the past decade. Gadkari said the industry’s size had increased from Rs 14 lakh crore in 2014 to approximately Rs 22-23 lakh crore. The sector currently provides employment to around 4.5 crore people, according to the minister.
Highlighting the industry’s export performance, Gadkari said Japanese manufacturers Toyota and Suzuki had started exporting vehicles manufactured in India to Japan. He also named Bajaj, Hero, Honda and TVS among the two-wheeler manufacturers with a growing export presence. He said around 50 per cent of the two-wheelers were being exported, although he did not specify the production base or individual company-wise figures.
He said India’s automobile industry had moved ahead of Japan to become the world’s third-largest automotive industry around eight to ten months ago. India currently has an automobile industry valued at approximately Rs 23 lakh crore, compared with Rs 49 lakh crore for China and Rs 79 lakh crore for the United States, according to Gadkari. He said India should aim to overtake both countries and become the world’s largest automobile manufacturing market.
Green Hydrogen And Waste-To-Energy
On green hydrogen, Gadkari called for research and technological development to reduce production costs from USD 5 per kg to USD 1 per kg. He said India could strengthen its position in the global energy market if it developed affordable technologies and indigenous production capabilities.
He also announced plans to introduce hydrogen-powered trucks and buses on 10 routes within four months. Companies including Ashok Leyland, Volvo, Tata, SPCL and Reliance are involved in the experiments, according to the minister. He identified hydrogen refuelling infrastructure as a major challenge and said efforts were underway to develop indigenous filling stations.
Gadkari also cited the Nagpur waste-to-CBG facility as an example of converting municipal waste into fuel. The plant currently produces 18 tonnes of CBG per day against its capacity of 32 tonnes. He said production is expected to reach full capacity within one to two months, making it the largest project of its kind in the country.
Bio-Bitumen To Reduce Import Dependence
The minister also highlighted the development of bio-bitumen as an alternative to petroleum-based road construction material. He referred to a one-kilometre experimental road on the Nagpur-Jabalpur National Highway constructed using bio-bitumen and said experts had found its performance better than conventional petroleum-based bitumen.
Gadkari said India consumes approximately 125 lakh tonnes of bitumen, with around half supplied by domestic refineries and the remainder met through imports. He said the government was working towards establishing standards for bio-bitumen to facilitate its commercial production.
Alternative Fuels For Energy Security
Gadkari said India’s dependence on imported fossil fuels, fertilisers and liquefied petroleum gas (LPG) required greater attention to domestic alternatives. He discussed the possibility of using carbon dioxide and hydrogen to produce urea and dimethyl ether (DME), which could also be blended with LPG. He said NTPC had issued a tender for technology that uses carbon dioxide and hydrogen to produce urea, while India currently spends approximately Rs 5.5-6 lakh crore on urea imports, according to his remarks.
He also highlighted the use of sustainable aviation fuel, stating that biofuel produced with the cooperation of the Petroleum Institute in Dehradun had been transported to Delhi and used in a Tata Vistara project. The development of cost-effective and proven alternative fuel technologies could help India reduce import dependence, improve manufacturing competitiveness and create new economic opportunities across agriculture and industry.
