Centre Rules Out Shelving E20 Fuel Programme Citing ₹1 Lakh Cr Investment

The central government on Friday ruled out making pure petrol or a 10% ethanol blend available alongside the 20% blend at retail outlets.

It stated that the logistics of maintaining multiple fuel grades across India's more than one lakh retail outlets, backed by a national network of refineries, terminals, depots and pipelines, would be unmanageable.

The government argued that doing so would render worthless the nearly ₹1 lakh crore a year in ethanol production and blending infrastructure financed by public sector banks in recent years.

"If, after creating this capacity, we were to arbitrarily revert to E10, what happens to these investments? What happens to the surplus production capacity?" the Ministry of Petroleum and Natural Gas said in a statement.

The ministry conceded that E20 delivers 3-5% lower mileage compared with conventional petrol but said the blend offers a higher octane rating, superior anti-knock properties, faster combustion, better pickup, smoother acceleration and cleaner engine operation.

It said the E20 rollout followed research by Niti Aayog, the Society of Indian Automobile Manufacturers and other institutions, and that once a fuel has been scientifically validated and accepted by the automotive industry, the focus should be on advancing adoption rather than reverting to an inferior standard.

On cost, the ministry said maize-based ethanol is procured at ₹71.86 per litre and that at an international crude price of around $70 per barrel, E20 is costlier to produce than pure petrol.

However, it argued that domestically produced ethanol reduces India's exposure to imported crude, which covers nearly 90% of the country's requirements, and insulates consumers from international price volatility.

As crude climbed above $100 per barrel during the West Asia crisis, India recorded one of the most moderate increases in retail fuel prices, the ministry said, attributing this to the buffer provided by ethanol blending.

What The Programme Has Delivered

Under the ethanol blending programme, India has saved over ₹1.97 lakh crore in foreign exchange, substituted nearly 316 lakh metric tonnes of crude oil, reduced around 952 lakh metric tonnes of CO2 emissions and transferred more than ₹1.66 lakh crore directly to farmers, the oil ministry said.

On vehicle compatibility concerns, the ministry cited Maruti Suzuki data showing the automaker had serviced nearly 2.5 crore vehicles under the E20 regime, including about 1.5 crore older models not originally certified as E20-compatible, without a surge in warranty claims or component failures.