Ethanol Blending Cost Motorists Rs 88,234 Crore

Ethanol blending was supposed to save India money on oil imports. Instead, it has drained close to Rs 88,234 crore from the pockets of ordinary motorists over the last three financial years, according to a data-based investigation by The Reporters’ Collective.

The numbers arrive at an awkward moment for the government. Union Petroleum Minister Hardeep Singh Puri recently stood before a room full of energy experts in Delhi and dismissed complaints about falling mileage on E20 fuel as “bullshit,” insisting that traffic congestion, not ethanol, was to blame for cars burning more petrol. Road Transport Minister Nitin Gadkari has made similar arguments, calling the mileage loss too small for ordinary drivers to notice.

The Collective’s calculations tell a different story. Ethanol carries about a third less energy than pure petrol when burned. So when the government pushed blending from roughly 12 percent to 20 percent between April 2023 and March 2026, vehicles across the country needed to guzzle an estimated 6.57 million metric tonnes of extra motor spirit just to travel the same distances. In the last financial year alone, that shortfall cost consumers close to Rs 37,843 crore.

None of this is exactly a secret inside the government. A 2021 Niti Aayog report, meant to lay out the roadmap for the Ethanol Blending Programme, had already flagged the trade-off. It estimated a 6 to 7 percent mileage penalty for four-wheelers built before the shift to E20, and projected savings of around Rs 30,000 crore a year on India’s crude oil import bill once the target was met. That report never quite squared the math on who would absorb the mileage loss once blending scaled up.

India hit its 20 percent blending target in July 2025, five years ahead of schedule, a milestone the government celebrated widely. Around the same time, complaints from car and two-wheeler owners began piling up. A LocalCircles survey of more than 44,000 urban vehicle owners found that a majority reported mileage drops of 15 to 20 percent since early last year, a scale of complaint the ministers have brushed off as anecdotal.

There is also no easy way out for drivers who want to avoid the blend. Pure, unblended petrol in Delhi currently costs Rs 66-68 more per litre than E20 fuel, making it firmly out of reach for most households.

No Response from the Government

Both the Petroleum Ministry and the Transport Ministry were sent detailed questions for this investigation. Neither responded before publication, and the government has yet to release the “extensive laboratory studies and field trials” that Puri has cited as proof that E20 fuel causes no real harm to vehicles.

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What the data does show is a pattern. Fuel consumption has consistently grown faster than the number of vehicles added to Indian roads each year, ever since blending accelerated past 10 percent, exactly the kind of gap you would expect if the mileage penalty were real and not, as Puri put it, insignificant.

For now, Gadkari has moved on to a different battle, having won the right to sue social media platforms over what he calls defamatory content about the ethanol programme. The bill for ordinary motorists, meanwhile, keeps quietly adding up.

Figures and findings referenced in this report are based on the investigation published by The Reporters’ Collective.