New Delhi:
The Centre has defended the push for using E20 or 20 per cent ethanol-blended petrol across the country and clarified that consumers would not see lower prices at fuel stations despite the integration of domestically produced biofuels.
The government said while the E20 transition shields the larger economy from international oil shocks, its production costs are tied to guaranteed farmer payouts rather than global crude fluctuations.
On the recurring public questions over pricing, the Ministry of Petroleum and Natural Gas said ethanol is bought from farmers at fixed and protected rates to support the agricultural sector. For example, maize-based ethanol is procured at around Rs 71.86 per litre.
Because these domestic procurement prices remain steady, E20 actually costs more to manufacture than conventional pure petrol when global crude oil trades around $70 a barrel. The ministry highlighted a visible retail cost advantage for E20 would only kick in if global crude prices spike drastically to the $120-$130 per barrel range.
Instead of immediate discounts at fuel stations, the financial benefit comes from replacing one-fifth of every petrol litre with domestic supply, insulating the country from sudden global oil market swings.
Pure petrol, E10 and E20 won’t be made available at fuel stations simultaneously. The ministry pointed out that running three independent supply chains across India’s fuel stations that number over 1 lakh is logistically impossible and financially unviable. Phasing out lower blends is needed to maintain a smooth distribution network.
The government dismissed anxieties that E20 fuel damages older engines built for lower blends. The ministry cited data from Maruti Suzuki, which serviced 2.84 crore vehicles in 2025-26. Out of these, 1.5 crore were older models not certified for E20, yet there were zero reported cases of engine corrosion or fuel component failure.
Regulatory bodies like ARAI, SIAM and IOCL confirmed no compatibility issues. The ministry clarified that older E10 manufacturing labels simply reflect the fuel standards of that specific model’s launch year and do not mean the vehicle is unsafe today.
While the government acknowledged a minor 3 to 5 per cent fall in fuel mileage, it countered that E20 delivers a higher octane rating for better engine performance and slashes lifecycle carbon emissions by roughly 40 per cent.
The country’s ethanol march began with a pilot project in 2001 and a formal policy in 2013. However, blending hovered at a mere 1.5 per cent before 2014 as production relied solely on seasonal sugarcane crops.
A series of policy overhauls after 2018 opened up production to diversified feedstocks like maize and damaged food grains. This multi-ministry push accelerated the blending rate from 8.1 per cent in 2020-21 to the current 20 per cent target.
According to data from the Petroleum Planning and Analysis Cell, this transition has successfully saved over Rs 1.97 lakh crore in foreign exchange by reducing crude imports, and transferred more than Rs 1.66 lakh crore directly to the rural economy and farmers.
The ministry stated this domestic buffer helped stabilize retail fuel inflation. Between June 2022 and June 2026, petrol prices in India rose by just 5.58 per cent, much lower than those experienced by neighbouring South Asian nations and several European economies during the same period.
