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Biofuels like ethanol are widely used as blended with gasoline in many countries. The consumption of diesel fuel in India is two and half times to that of gasoline and any small reduction in the consumption of diesel fuel, with use of renewable fuels like ethanol as a blend, enhances the energy security of this country. With the use of suitable chemicals as emulsifying agent for preparing a stable blend of ethanol in diesel and also by adding the additives such as cetane improver and lubricity improver, it is possible to use ethanol in diesel. This paper describes the performance evaluation of 5%ethanol-diesel blend in tractors with respect to the engine's power output, fuel economy and emissions. The cold startability tests in climatic chamber at 0°C were also done in order to see the startability of ethanol diesel blend under low temperature applications. It was observed that there is marginal reduction in the CO and PM emission with a marginal increase in the NOx emissions.