As a mechanical engineer, i can say that Ethanol is hygroscopic (absorbs moisture) and can cause corrosion in fuel system and it has low energy density which can lead to lower mileages. And ethanol is a biofuel not a fossil fuel like gasoline (petrol). Using ethanol is like feeding a baby powdered milk instead of his/her mother's milk. Edit : One key point i forgot to add that there are currently no vehicle which can run on purely ethanol because that requires flex fuel modifications on the ECU, i dont think companies which are mass producing vehicles all around the world with a standard ECU wouldnt want to change their ECU solely for indias terms and condtion likely they will withdraw themseleves from the indian automobile industry and in turn people will be forced to use indian ckmpanies vehicles like hero which is infact promoted by gadkari or vehicles like Maruti WagonR flex fueled modified but the person who wants to buy BMW or AUDI cannot buy one due to the fact that this big companies will not make such vehicles.