Govt says no to E10, cites ₹1 lakh crore per year investments in ethanol production financed by PSBs

The Ministry of Petroleum and Natural Gas on Friday said that reverting to E10, a fuel blend comprising 90% petrol and 10% ethanol, would jeopardize investments of nearly ₹1 lakh crore per year in ethanol production and associated infrastructure financed by public sector banks.

“Over the past several years, public sector banks have financed nearly ₹1 lakh crore/yr of investments in ethanol production and associated infrastructure. Dedicated ethanol plants, distilleries, storage facilities and logistics networks have been created to meet India's blending targets,” the government said in a release addressing concerns around India’s ethanol blending programme.

“If, after creating this capacity, we were to arbitrarily revert to E10, what happens to these investments? What happens to the surplus production capacity? What happens to thousands of crores invested by farmers, cooperatives, entrepreneurs, financial institutions and public sector companies in good faith based on a national policy?” the petroleum ministry asked.

This comes after the ethanol controversy took a political turn with the Opposition parties targeting the government for forcing E20 fuel on over 30 crore non-compliant vehicles. Critics of the policy have asked the government to provide E10 fuel at petrol pumps so that vehicles sold before April 2023 can use the fuel mentioned in their owner’s manual.

Responding to this recommendation, the petroleum ministry said that the suggestion that every petrol pump should stock pure petrol, E10 and E20 simultaneously also ignores the realities of India's fuel distribution network.

“India operates over one lakh retail outlets, supported by an extensive network of refineries, terminals, depots and pipelines,” the ministry said. “Maintaining multiple grades of base petrol across this vast supply chain would create an enormous logistical challenge, increase handling costs, complicate inventory management and reduce operational efficiency,” it added.
While pure petrol or E0, priced upwards of Rs 160 per litre, is available at select petrol pumps in top cities, it is not available across the country.

Premium fuels are niche products sold in limited quantities at a significant price premium because specialised performance-enhancing additives are blended into them, the petroleum ministry said.

“They are not separate nationwide base fuel streams. Running parallel nationwide supply chains for pure petrol, E10 and E20 would be an entirely different proposition,” it added.
India’s ethanol blending programme started over two decades ago. However, despite that ambition, blending remained stuck at around 1.5% until 2014.

“When India decided to move towards higher ethanol blends, the automobile industry was involved at every stage,” the ministry noted.

For E10 compatibility, manufacturers were consulted well in advance as early as 2020-21. India achieved its E10 target (10% ethanol blending in petrol) in June 2022.
India achieved the 20% ethanol blending target in July 2025, five years ahead of the 2030 deadline.

The government reiterated that ethanol is not a new fuel, citing the example of the Model T built by Henry Ford. “More than a century ago, Henry Ford designed the Model T to run on ethanol, and countries across the world, including Brazil and the United States, have used ethanol blends for decades,” it said.

While Brazil is moving from E27 to E30 blend of petrol, the United States has only 10% blend of ethanol in gasoline. European Union, too, has E10 as baseline blend. Countries such as China and Russia have no such mandate.