Ethanol, an alcohol produced from sugarcane and food grain-based raw materials, was introduced in India nearly 23 years ago as a bio-fuel alternative to petrol used in motor transport.

Launched in January 2003, the government’s Ethanol Blending Programme initially aimed to blend five percent ethanol into petrol supplied in nine states and four Union Territories. However, until 2013-14, the actual ethanol blending remained negligible, between 0.1 percent and 1.5 percent, well below the government’s initial target.

The program’s trajectory got a boost after the BJP came into power. In April 2019, ethanol-blended petrol was rolled out nationwide (with a few exceptions), with blending percentages rising sharply in the last three years, to 20 percent in July last year. In the past year, Indian motorists began to complain of a sharp increase in their fuel bills, as they purchased more motor spirit for the same distance.

India currently imports nearly 88 percent crude oil from abroad. The hope was, besides other advantages, mixing ethanol would reduce the government’s fuel import bill.

From its introduction in 2003 until 2014, ethanol blending was nearly negligible. In June 2018, the government notified its National Policy on Biofuels and set the goal to blend 20 percent ethanol into motor spirit by 2030. A report by Niti Aayog published three years later, claimed that India would save nearly Rs 30,000 crore in its oil import bill once E20 blending is achieved.

In July 2025, India achieved its target of 20 percent ethanol blending, five years ahead of schedule. For the 2025-2026 financial year, an average of 19.9 percent ethanol was blended into motor spirit. We calculated this using the monthly ethanol blending percentages published by the Petroleum ministry’s Petroleum Planning Analysis Cell (PPAC).

In India, the price of petrol has remained the same even after blending. In the United States, which is the largest producer of ethanol in the world, ethanol-blended fuel is subsidised in comparison to unblended petrol.

On this basis, for the amount of excess fuel consumed Indians were forced to foot an additional bill of Rs 37,843 crore in the FY2025-26 alone, and Rs 88,234 crore across three fiscal years.

Since the government did not provide a clear answer on the loss of fuel efficiency from running vehicles on E20 blended fuel, The Collective used a simple calorific value conversion between ethanol and pure petrol to calculate the loss in mileage for cars and two-wheelers running on E20 petrol.

Burning a single litre of ethanol gives 33 percent less energy than burning a single litre of petrol. So, we calculated that blending 20 percent ethanol into motor spirit will give 6.7 percent less energy than pure petrol. An expert in the automobile industry who has worked on ethanol blending also validated this conversion. On this basis we calculated the projected consumption of motor spirit for the all financial years since April 2023, the starting point of our analysis, from when blending ramped up from E10 to E20.

In FY2025-26, India burned 42.6 million metric tonnes (MMT) of motor spirit which had nearly 20 percent blended petrol. If motor spirit burned was just pure petrol, Indians would have only needed 39.76 million metric tonnes. So, for FY2025-26, India burned 2.83 MMT of motor spirit in excess.