The Centre has defended the nationwide rollout of E20 petrol, stating that ethanol-blended fuel is unlikely to be cheaper than pure petrol at fuel stations because its production costs are linked to protected payments made to farmers rather than international crude oil prices. The government said the primary benefit of ethanol blending is reducing dependence on imported crude oil and protecting the economy from global price shocks.
The Ministry of Petroleum and Natural Gas explained that ethanol used in E20 petrol is procured from farmers at fixed rates to support the agricultural sector. For instance, maize-based ethanol is purchased at around Rs 71.86 per litre. Due to these domestic procurement costs, E20 fuel can currently cost more to produce than conventional petrol when global crude oil prices remain around $70 per barrel.
The ministry said consumers may see a direct price advantage from E20 only if international crude oil prices rise significantly, reaching around $120-$130 per barrel. Instead of immediate reductions in fuel prices, the economic benefit comes from replacing 20 per cent of petrol consumption with domestically produced ethanol, reducing exposure to fluctuations in global oil markets.
Also Read: Air India Clarifies No Grounding Of Boeing 787-8 Fleet Amid Online Claims
The government also clarified that petrol with different ethanol blends, such as pure petrol, E10 and E20, will not be supplied simultaneously at fuel stations. Maintaining separate supply chains for different fuels across more than one lakh fuel stations in India would be difficult and financially impractical. Officials said a phased transition is necessary to ensure efficient fuel distribution.
Addressing concerns about vehicle compatibility, the Centre said available data does not indicate major problems with older vehicles using E20 fuel. The ministry cited information from Maruti Suzuki, which serviced 2.84 crore vehicles in 2025-26, including 1.5 crore older models that were not originally certified for E20. According to the government, no cases of engine corrosion or fuel component failure were reported.
The ministry added that agencies including the Automotive Research Association of India (ARAI), Society of Indian Automobile Manufacturers (SIAM) and Indian Oil Corporation Limited (IOCL) have not found significant compatibility issues. While E20 may result in a 3 to 5 per cent reduction in mileage, officials said the fuel provides a higher octane rating and can reduce lifecycle carbon emissions by around 40 per cent.
India’s ethanol blending programme began with a pilot project in 2001 and gained momentum after a formal policy was introduced in 2013. Ethanol blending levels remained low before 2014 but increased after policy changes allowed the use of alternative feedstocks such as maize and damaged food grains. According to government data, the transition has helped save more than Rs 1.97 lakh crore in foreign exchange by reducing crude oil imports and transferred over Rs 1.66 lakh crore to farmers and the rural economy.
Also Read: Akal Takht Action Linked Video Report Clarifies It Is Not Bhagwant Mann