India’s Rollout of Ethanol-Blended Petrol Lacks Transparency and Fairness
E20 Fuel Policy Limits Consumer Choice, Keeps Prices High, and Affects Food Security
September 2, 2025
India’s nationwide rollout of 20 percent ethanol-blended petrol, known as E20, has expanded rapidly since early 2023. The policy is part of a larger plan to reduce dependence on imported crude oil, increase income for farmers and meet environmental targets. While these goals align with national interests, the implementation has created widespread confusion, raised costs for vehicle users and triggered public concerns about fairness, transparency and long-term consequences.
The E20 fuel contains 20 percent ethanol and 80 percent petrol. Ethanol is a biofuel made primarily from sugarcane and maize. The government has promoted ethanol blending for years under the Ethanol Blended Petrol (EBP) Programme. The previous target for achieving 20 percent blending was 2030. The timeline was advanced to 2025 and later brought further forward to 2023 in select locations. Petrol stations in major cities are now replacing E10 and E5 blends with E20, leaving millions of vehicle owners with no alternative.
Ethanol-blended petrol is cheaper to produce than pure petrol. Ethanol prices paid to suppliers range between 65 rupees and 69 rupees per litre, compared with over 100 rupees per litre for unblended petrol in retail markets. However, this cost difference has not been passed on to consumers. Pump prices for E20 petrol remain the same as for previous blends, despite the cheaper inputs.
Oil companies and the government have not offered a clear explanation. The absence of price adjustment raises concerns that the public is funding the transition without receiving any economic benefit.
Vehicle compatibility presents another major issue. According to India’s automotive industry and regulatory bodies, only vehicles manufactured from April 2023 onwards are fully compatible with E20 fuel. Most older vehicles on Indian roads are not designed for such high ethanol content. Ethanol absorbs water and can degrade rubber and plastic parts within the engine, such as hoses, seals and fuel system components. Vehicle owners have reported problems including engine knocking, reduced performance and higher maintenance costs.
Fuel efficiency is also affected. Ethanol contains less energy per litre than petrol. This means vehicles using E20 fuel travel fewer kilometres per litre than they would on E5 or E10 blends. Field tests by automotive companies and earlier research by NITI Aayog estimate a decline in mileage of between 4 and 10 percent, depending on the engine type and condition. This increases fuel consumption and running costs for motorists, especially those who drive frequently or use two-wheelers.
Consumers have no say in the fuel they buy. In many places, petrol stations no longer sell ethanol-free petrol or lower blends like E10. Labels at pumps are often missing or unclear.
A Public Interest Litigation filed in the Supreme Court sought mandatory labelling of ethanol content and the continued availability of lower blends, but the Court dismissed the plea on Sept. 1. It accepted the government’s argument that the policy serves national interests and declined to interfere. As a result, drivers with incompatible vehicles must either risk damage or pay more for repairs.
The ethanol policy also carries significant implications for agriculture and food prices. The increase in ethanol demand has led to greater diversion of maize and sugarcane for fuel production. This has contributed to rising prices of maize and, indirectly, wheat and other staples. Experts have warned that the growing preference for ethanol crops over food crops distorts agricultural markets and increases the cost of living, especially for lower-income households.
Environmental effects should also be considered. Ethanol is seen as a cleaner-burning fuel in terms of carbon dioxide emissions. However, its cultivation and production require high water use, especially for sugarcane. Studies have raised questions about the net environmental benefit of expanding ethanol production in water-stressed regions. In some cases, ethanol combustion can also produce higher levels of certain pollutants such as aldehydes, which have adverse health effects.
In Brazil and the United States, ethanol blending evolved gradually with strong regulatory support, vehicle modifications and public awareness. Brazil introduced flex-fuel vehicles capable of running on 100 percent ethanol and clearly labelled petrol stations. The United States limited higher ethanol blends to specific zones and provided transparent information to consumers. India’s transition has proceeded at a much faster pace, without those institutional safeguards.
The success of India’s adoption of ethanol-blended petrol depends not only on targets met but also on the conditions under which those targets are pursued. Consumers must be given clear information, fair pricing and real choices. Farmers and food systems must be protected from unintended consequences. Environmental benefits must be evaluated against regional realities. Without transparency and fairness, the fuel policy risks deepening public mistrust, harming consumers and reducing support for future climate-related reforms.
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