The Real TRUTH About E20 Petrol | Full POLICY EXPLAINED

Imagine waking up one morning and realizing the petrol you’ve been filling in your car is no longer the same. The pump still says ₹100 per litre, but your mileage has dropped. Your car feels sluggish. Rumors float around on WhatsApp and X: “E20 is a scam,” “Engines are getting damaged,” “Insurance claims are being denied.”

What’s really happening? Let’s break down the truth behind E20 petrol—the 20% ethanol blending policy—and why it has become one of India’s most debated fuel reforms.

Why E20 in the First Place?

On paper, E20 was a brilliant move. The government had four big goals:

1. Cut Oil Imports

   • India imports over 85% of its crude oil, spending $137 billion in FY25.

   • With 20% blending, the country could save $28 billion annually in forex.

2. Boost Farmer Incomes

   • Ethanol is made from crops like sugarcane, rice, maize, and corn.

   • By diverting surplus produce to ethanol factories, farmers could find a steady market.

3. Cleaner Environment

   • Ethanol burns cleaner than petrol.

   • Lower carbon emissions help India inch closer to its Net Zero goals.

4. Energy Security

   • Less dependence on oil-rich nations like Saudi Arabia and UAE.

   • More domestic production = more resilience.

On paper, it’s a win-win—cheaper fuel, richer farmers, cleaner air.

The Execution Problem: Why Drivers Are Upset

If the idea is so good, why the backlash? The problem is execution, not intention.

1. Mileage Drop: Physics Cannot Be Cheated

• Petrol has a calorific value of 32 MJ/L.

• Ethanol? Just 21 MJ/L. That’s a 34% energy gap.

• As a result, mileage falls:

  • Cars calibrated for E0 → E20 see a 6–7% drop.

  • Two-wheelers → 3–4% drop.

Example: If your car gave 15 km/l on E0, with E20 it drops to 14.1 km/l. Over 10,000 km, you pay ₹4,000 extra in fuel.

NITI Aayog itself recommended that E20 be priced cheaper to offset this. But pump prices haven’t changed because taxes dominate retail pricing. Consumers are paying more for less.

2. Engine Compatibility Gap

Ethanol absorbs water, corrodes rubber, and damages seals/pumps.

• OEMs asked for 4 years to redesign engines.

• Rollout happened in less than 2.

• “E20-ready” cars today are partially compliant, still tuned for E10.

• Pre-2023 bikes and older cars may need retrofit kits worth ₹4,000–₹6,000.

Without clarity, lakhs of drivers are stuck in a grey zone—unsure if their vehicle is safe.

3. Food vs Fuel Dilemma

• In 2023–24, maize-based ethanol surged to 42% of all production.

• The same year, India faced a maize shortfall of 5 million tonnes, forcing imports.

• Farmers naturally sell to ethanol plants offering better rates, but this risks food inflation.

Instead of reducing costs, ethanol blending could actually make food and feed more expensive.

4. Insurance Shock

Some insurers like Acko hinted that engine failure due to wrong fuel won’t be covered. Imagine filling government-mandated fuel and then being denied claims!
Although SIAM (industry body) assures testing was fine, the mixed messaging breeds distrust.

5. The Hidden Water Cost

Producing ethanol is water-intensive:

• 1 litre ethanol from sugarcane = 3,600 litres of water.

• 1 litre from maize = 4,670 litres.

In already water-stressed states like Maharashtra and UP, this is a ticking time bomb.

Lessons from Brazil (and Why India Messed up)

Brazil started ethanol blending in the 1970s. Today, every litre of petrol has 27% ethanol. The secret?

• Phased rollout over 40 years, not 4.

• Flex-fuel cars: >80% of Brazilian vehicles can run on any mix from E0 to E100.

• Consumer choice at the pump: Drivers decide daily which blend to use.

India instead sprinted: The 2030 target was achieved in 2025—five years early. The ecosystem (OEMs, insurers, retailers, farmers) couldn’t catch up.

Gadkari Connection

Public records show that companies linked to the Gadkari family—Kin Agro Industries (earlier Umred Agro Complex) and Manas Agro—have expanded aggressively in the ethanol business.

Another company - CIAN Agro - Nikhil Gadkari is Managing Director. He is son of Nitin Gadkari.

Net revenue jumped from ₹17 crores in June 2024 to ₹510 crores in June 2025. This is almost 3000% jump in one year. Share price soared 550% in just 16 months.

Quick Comparison (Current Scenario)

The Way Forward

India can still fix E20—if it learns from global best practices:

1. Repace rollout to 2030. Allow OEMs 4 years to upgrade engines fully.

2. Price ethanol blends lower. Consumers shouldn’t pay more per km.

3. Mandate flex-fuel engines. New cars must run safely on multiple blends.

4. Shift from 1G to 2G ethanol. Use agricultural waste, not food crops.

5. Fix water governance. Tie blending targets to water budgets.

6. Consumer choice. Offer E0/E1The Way Forward

The Bottom Line

E20 isn’t a scam. It’s a good idea, badly executed.

• The intention: save forex, enrich farmers, cut emissions.

• The reality: higher costs, lower mileage, confused consumers.

Execution is everything. Roll it out smartly, with choice and technology upgrades, and India can create a sustainable ethanol economy. Rush it, and it risks becoming another policy with good intentions, bad outcomes.

Government has said in a clarification that usage of E20 fuel will not void your insurance claim, however, you better need to be prepared.

Steps to protect yourself:

• Check E20 compatibility with your vehicle manufacturer or an authorised service centre.

• Inform your insurer and keep proof on record.

• Follow manufacturer-recommended fuel use strictly.

• Avoid unauthorised repairs before the insurer’s surveyor visits.

• Maintain regular servicing to reduce the chance of disputes.

As the government rolls out E20 nationwide, motorists need to look beyond mileage debates.

Warm regards,
Tejas Lakhani