June 5 (Reuters) - India will start rolling out gasoline blended with 85% ethanol (E85) that will be about 20 rupees per litre cheaper than regular E20 fuel, Oil Minister Hardeep Singh Puri said on Friday.

Indian automakers have started launching flex-fuel vehicles that are compatible with the higher ethanol variant.

o E85 fuel will be cheaper than E20 due to its lower calorific value, Puri said. E20 sells for about 102 rupees ($1.07) per litre in New Delhi.

o India plans to roll out E85 at 50 to 100 fuel stations in 2026, scaling up to around 5,000 outlets by 2027, he added.

o E85 fuel is intended for flex-fuel vehicles, which can operate on gasoline blended with high amounts of ethanol.

o Puri said automakers and automobile industry associations are on board for the launch.

o Automakers such as Maruti Suzuki and Hero MotoCorp have rolled out flex-fuel compatible variants of their popular WagonR and Splendor models.

o E85 fuel will help cut pollution and reduce the country's reliance on imported oil, Puri said.

o India, the world's third-largest oil importer and consumer, currently sells gasoline blended with 20% ethanol.

o Earlier in April, India proposed allowing higher ethanol blends such as E85 and E100 under vehicle rules.

o The move followed its 2025 achievement of 20% ethanol blending and aims to further reduce reliance on fuel imports.

o The Indian government faced a backlash from motorists after the nationwide rollout, on fears that it may affect the performance of vehicles.

o Separately, India's oil secretary Neeraj Mittal on Friday said the government is working on a programme to boost compressed biogas production.

($1 = 94.9450 Indian rupees)

(Reporting by Bipasha Dey in Bengaluru and Nidhi Verma in New Delhi; Editing by Sahal Muhammed)