E20: The silent experiment at your petrol pump

Most automobile owners were startled by the news that the petrol they have been buying since April 2025 was blended with 20 per cent ethanol (E20) made from sugarcane, maize, grains and surplus crop waste. The sudden, secretive rollout — advanced from the original 2030 target — sparked public anger, especially since most carmakers recommend E5 or E10, not E20. Consumers had no say in the matter nor any prior warning.

While automobile manufacturers have maintained a diplomatic silence, dealers admit fuel efficiency may drop by 2–4 per cent in lab conditions. On the road, and for older vehicles, that figure would be higher.

The government dismissed concerns, claiming minor part replacements would suffice. Transport minister Nitin Gadkari’s claim of ethanol as the “fuel of the future” rang hollow, as did his promise that E20 would cost just Rs 22 per litre (consumers continue to shell out over Rs 100).

The government claims its enthusiasm is driven by energy security. India imports over 85 per cent of its crude oil, making it vulnerable to global price shocks and geopolitical uncertainties. Ethanol blending aims to cut dependence by replacing some of that oil with a domestic, renewable alter-native. The government claims over Rs 1.3 trillion in savings over the past decade, with more expected as blending increases.

Critics, however, question the evidence behind these claims, arguing that the real beneficiaries are large farmers, sugar cooperatives and industry — not the broader economy.

The National Biofuel Policy (2018, amended 2022) accelerated ethanol blending by expanding feedstock and advancing targets. E10 became standard in 2022, and E20 was widely available by early 2025, making India one of the fastest-growing ethanol markets. Subsidised loans, fixed ethanol pricing and use of surplus grains gave it a further boost.

One question the consumer advocacy group Forum for Fair Fuels has repeatedly asked is this: “Has the rapid rollout of the ethanol mandate compromised transparency and fairness, leading to reduced consumer choice and risking damage to older vehicles without adequate safeguards or compensation?”

To which we add our own:

Do ethanol blends lower fuel prices?

While intended to make petrol cheaper, the savings have rarely trickled down to consumers. A 15–20 ethanol blend could theoretically lower pump prices by Rs 3.5–8 per litre. However, as Sanjeev Kumar, energy analyst with JMK Research and Analytics, points out, “Retail petrol prices are largely determined by global crude rates and layered taxes, which blunt any cost advantage ethanol might offer.”

In some cases, ethanol procurement costs have equalled or even surpassed petrol prices. And since ethanol has around 30 per cent less energy content than petrol, fuel efficiency drops by 3–7 per cent—with some users reporting declines of up to 15 per cent. Motorists unknowingly foot the bill, paying more per kilometre and indirectly subsidising the ethanol industry.

What do E5, E10, E20 denote?

The Niti Aayog report, ‘Roadmap for Ethanol Blending in India 2020–25’ explains that E5, E10, E20 simply indicates the percentage of ethanol in petrol — 5 per cent, 10 per cent and 20 per cent respectively.

How transparent is the programme?

Ethanol is blended with petrol at OMC (oil marketing company) depots before distribution, meaning consumers may already be filling up on E10 or E20 without knowing the precise blend. Unlike in Brazil, where pumps clearly indicate the blends, India offers no such labelling, making motorists unwitting participants in a silent experiment.

A recent PIL demanding ethanol labelling and ethanol-free petrol for older vehicles was dismissed by the Supreme Court, which sided with the government’s stance of prioritising energy security and farmer welfare over individual choice. Critics warn this undermines consumer rights and vehicle warranties, while regulators advise motorists to follow manufacturer guidelines.

What are the concerns and recommendations?

The Niti Aayog report flags supply risks from seasonal crop fluctuations and calls for diversified ethanol feedstocks. It also urges clearer fuel labelling, stronger consumer awareness and better inter-ministerial coordination to address regulatory and infrastructure gaps.

While acknowledging that current pricing and tax policies limit ethanol’s cost benefits for consumers, the roadmap recommends fiscal incentives and better policy alignment, framing ethanol blending as a ‘national priority’ that requires phased rollout, stakeholder coordination and careful design for sustainable impact.

What’s the industry response to E20?

Modern flex-fuel engines can handle E20, benefitting from ethanol’s higher-octane rating which improves combustion and reduces engine knocking. However, its lower energy content reduces mileage slightly, and older vehicles risk corrosion. Maruti Suzuki warns that while E10 is safe, E20 needs engine recalibration and close monitoring to avoid issues.

Honda Motorcycles has flagged corrosion risks in older two-wheelers running on E20 fuel. Rajiv Bajaj, managing director, Bajaj Auto, said upfront, “Legacy Bajaj models designed before ethanol blends became widespread may face engine degradation on E20 due to material compatibility issues.”

The Society of Indian Automobile Manufacturers issued a cautionary statement: ‘Government policies regarding ethanol blending should be aligned with vehicle technology readiness; a phased approach is crucial since consumers cannot be compelled into using higher blends without adequate infrastructure and vehicle compatibility’.

Who really benefits from ethanol?

Under India’s ethanol policy, sugar mills and distilleries enjoy guaranteed procurement and assured prices, while car manufacturers stand to gain as flex-fuel readiness becomes mandatory.

Despite government claims of farmer support, ethanol benefits largely bypass small cultivators. Sugarcane, a water-intensive crop, dominates production — and profits flow mostly to sugar mills, not to farmers growing food grains. Farmer leader Raju Shetti said: “Only a fraction of us benefit. Small food grain farmers get sidelined while sugar mills cash in.”

The use of food grains adds a troubling dimension to the issue. In 2025, over 50 lakh tonnes of rice from the Food Corporation of India was diverted for ethanol production. Officials insist that it is surplus or broken rice unfit for consumption, but critics condemn the move as unethical in a country still struggling with widespread malnutrition. Burning food for fuel exposes glaring policy contradictions and raises urgent questions about priorities.

What’s the Gadkari connection?

Political lobbies are entrenched in sugarcane-growing states such as Maharashtra and Uttar Pradesh. Union minister Nitin Gadkari’s championing of ethanol is under scrutiny amid concerns over companies linked to his family, specifically Cian Agro Industries and Manas Agro Industries.

Cian Agro Industries, run by Nitin Gadkari’s son Nikhil, saw a dramatic revenue surge from Rs 17 crore in early 2024 to over Rs 510 crore by mid-2025. This exponential increase has largely been attributed to diversification into multiple subsidiaries and income streams beyond ethanol production. Public data indicates that the volume of ethanol it produces is small relative to the national scale.

Manas Agro Industries, associated with Nitin Gadkari’s other son Sarang, also produces ethanol, but financial details are scarce. Farmer leader Raju Shetti estimates that both family companies produce just 8–10 lakh litres annually — that’s less than 0.1 per cent of India’s 1,685 crore litre ethanol capacity. The timing of the ethanol policy push and the financial gains of Nitin Gadkari’s family-linked firms have added fuel to the fire. Critics argue Gadkari’s advocacy created favourable conditions for his own companies, while supporters say their production is too tiny to influence the national market.

Who can India look to, moving forward?

Brazil is the global pioneer, offering E18 and E27 as well as pure ethanol (E100). Crucially, Brazilian motorists are fully informed and their cars are predominantly flex-fuel compatible. The US blends about 10 per cent ethanol nationwide, with higher blends available in select states, also clearly labelled. India’s leap to E20 — without widespread flex-fuel vehicles or informed consumers — is highly unusual and potentially burdensome.