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Why the government wants to blend more ethanol with petroleum products?
The Ministry of Petroleum and Natural Gas has issued a clarification saying concerns around 20% ethanol-blended petrol (E20) harming engines or reducing performance are “largely unfounded and not supported by scientific evidence.”
However, why does the government want to blend more ethanol with petrol in the first place?
This is because India’s fuel policy is undergoing a shift. Petrol at pumps across the country now contains more ethanol than ever before, not as a climate gesture, but as a strategic recalibration of how India manages its energy security, rural economy, and urban environment.
By March 2025, the government hit its “E20 blending target 20% ethanol in petrol” five years ahead of schedule. Average blending levels stood at 17.98% in February 2025, up from 14.6% the year before, according to official data.
The next target, already in sight, is a 30% blend (E30) by 2030.
Behind the push lies a strategic policy bet that domestic ethanol can help India cut costly crude oil imports, reduce greenhouse gas emissions, and build a parallel income stream for farmers.
ECONOMICS OF ETHANOL
India imports more than 85% of its crude oil, making it vulnerable to global supply shocks and dollar volatility. By substituting a portion of petrol with ethanol, a domestically produced biofuel, the government is looking to blunt the impact of these external risks.
Since 2014, the ethanol blending programme (EBP) has helped India save over Rs 1360 billion in foreign exchange and replace nearly 19.3 million tonnes of crude oil, according to the Ministry of Petroleum and Natural Gas.
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