The Government of India has rolled out E20 fuel-petrol blended with 20% ethanol across the country since April 2025. While the policy is presented as a step towards energy independence and cleaner transport, it has raised concerns among motorists, insurers, and consumer groups.
What is E20 fuel?
E20 is petrol mixed with 20% ethanol, an alcohol mainly produced from sugarcane and food grains like maize and rice. India earlier used E5 and E10, but these have now been phased out.
According to government estimates:
- The shift to E20 will save $5 billion in oil imports this year.
- It will add nearly $4.6 billion to farmer incomes.
- It reduces vehicular carbon emissions compared to pure petrol.
Why are motorists worried?
Most vehicles in India were designed for E10 or lower blends. Owners of older cars and two-wheelers now have no option but to use E20, raising concerns about:
- Lower mileage: Drivers report a 6–8% fall in fuel efficiency, though lab tests suggest 2–4%.
- Vehicle performance: Cases of overheating, engine knocking, and faster wear of rubber parts and gaskets have been reported.
- Compatibility: Automakers say vehicles manufactured after April 2023 are E20-ready, but millions of older vehicles remain in use.
What does the industry say?
The auto industry has publicly supported the rollout. P.K. Banerjee, executive director of SIAM, recently said:
“E20 in older vehicles lowers mileage but is not a safety risk.”
However, industry opinion has shifted. In 2020, SIAM warned that E10 should remain available alongside E20 to ensure the “safe operation” of vehicles.
What about insurance?
Insurance coverage has emerged as a grey area.
- HDFC Ergo stated it cannot provide a concrete position on E20-related claims.
- ICICI Lombard said policy interpretation is still “vague.”
- Acko Insurance initially said damages from E20 were excluded, then clarified that only accidental damage is covered—engine wear remains the manufacturer’s responsibility.
Experts caution that insurers may treat the use of E20 in non-compatible vehicles as “gross negligence,” which can justify claim rejection.
What did the Supreme Court say?
On September 8, 2025, the Supreme Court dismissed a petition challenging the mandatory rollout of E20.
- The petitioner argued motorists should have the option of ethanol-free petrol, especially for vehicles made before 2023.
- The Attorney General opposed the plea, saying the decision had been taken after due consideration and was meant to benefit farmers and reduce imports.
- The Court refused to intervene in the policy but directed that ethanol content be clearly displayed at pumps.
Who benefits from the policy?
- Sugar and ethanol companies: Bajaj Hindusthan Sugar, Balrampur Chini Mills, Shree Renuka Sugars, Praj Industries, and CIAN Agro.
- Oil marketing companies: IOC, BPCL, HPCL, through reduced crude imports.
- Political controversy: Congress and AAP have alleged conflict of interest involving Union Minister Nitin Gadkari’s sons, Nikhil and Sarang, who run ethanol companies that have grown rapidly during the E20 rollout. Gadkari denies wrongdoing.
The bigger picture
The E20 policy is part of India’s broader biofuel roadmap, originally targeting 2030 but achieved in 2025. The government sees it as vital for cutting emissions, boosting farmer incomes, and saving foreign exchange.
However, with no alternative fuels at pumps, older vehicles remain exposed to higher costs, performance issues, and insurance uncertainty.
While the long-term goal is environmental and economic sustainability, the sudden rollout has placed the burden of adjustment squarely on Indian motorists.
(This report has been compiled with inputs from multiple media sources)
