India’s decision to blend more ethanol with petrol is a strategic shift in its energy policy, aimed at enhancing energy security, supporting the rural economy, and improving environmental outcomes. By March 2025, the government achieved its E20 target—20% ethanol blended in petrol—five years ahead of schedule. This milestone marks a significant transformation in how India approaches its fuel mix, with an eye on reducing dependence on imported crude oil and cushioning the economy against global oil price volatility.
The economic rationale behind ethanol blending is compelling. India imports over 85% of its crude oil, which leaves it vulnerable to international price fluctuations and foreign exchange pressures. Ethanol, a domestically produced biofuel, offers a viable substitute. Since 2014, the ethanol blending programme has reportedly saved the country over ₹1.36 lakh crore in foreign exchange and replaced nearly 193 lakh tonnes of crude oil. Simultaneously, ethanol procurement from farmers and distilleries has injected over ₹3 lakh crore into the rural economy, creating a stable market for surplus agricultural produce like sugarcane and grains.
Environmental benefits are also at the core of this initiative. Ethanol burns cleaner than petrol and results in significantly lower greenhouse gas emissions. A study by NITI Aayog reveals that ethanol derived from sugarcane emits 65% less carbon dioxide than petrol, while maize-based ethanol cuts emissions by around 50%. As E20 petrol becomes more common in Indian cities, early data suggest improvements in urban air quality, particularly in reducing carbon monoxide and unburned hydrocarbon levels.
However, this ambitious programme comes with its own set of challenges. Using food crops like sugarcane and rice for ethanol production can strain food security, especially in years of poor harvest. Sugarcane, in particular, is water-intensive and can exacerbate water scarcity in several regions. The government is attempting to address this by diversifying feedstock sources, including agricultural waste and damaged food grains, and by promoting second-generation biofuels that do not compete directly with food supplies.
Vehicle compatibility remains another concern. While government-backed studies claim that E20 does not significantly impact engine performance or fuel efficiency, some drivers have reported issues such as lower mileage and engine wear in older vehicles not designed for higher ethanol blends. Real-world conditions—such as poor maintenance and climatic factors—could also influence how well these vehicles adapt to ethanol-rich fuels. Although modern cars are increasingly being manufactured with E20 compatibility in mind, legacy vehicles could still face problems that warrant closer scrutiny.
Ultimately, the push toward ethanol-blended petrol is part of a broader effort to achieve energy self-reliance and reduce the country’s carbon footprint. As the government eyes the next target—30% ethanol blending by 2030—it must balance environmental sustainability, economic viability, and social equity. The long-term success of this transition will depend on how effectively India can scale its ethanol production, upgrade vehicle standards, and ensure that both farmers and consumers benefit from this green fuel revolution.
