Datanomics: Ethanol push gains ground; dependence on oil imports persists

India's E20 fuel rollout boosts ethanol blending, but rising fuel demand keeps crude import dependence high, raising questions on its impact on energy security

Amid the energy crisis triggered by the West Asia war, Prime Minister Narendra Modi highlighted ethanol blending as a key strategy to reduce India’s dependence on imported crude oil. The policy has seen rapid progress, with India achieving 20 per cent blending in ethanol supply year 2026 (ESY26), five years ahead of the schedule. Starting April 1, petrol pumps nationwide will begin supplying E20 fuel — petrol blended with up to 20 per cent ethanol and marked with a 95 Research Octane Number (RON) — marking the programme’s rollout. Will it reduce our oil imports?

 

Ethanol blending surges

 

Ethanol blending rose sharply from 1,912.1 million litres in 2018-19 to 10,228 million litres in 2024-25, with growth accelerating after 2020-21. India has already reached 20 per cent blending in FY26, indicating sustained momentum. 

 

Rise in import dependence

 

When ethanol blending was at 5 per cent in 2018-19, crude oil imports were 226 mt, meeting about 87.4 per cent of the total requirement. Despite blending rising to 20 per cent, imports increased to 226 mt in FY26 (until February), with import dependence also rising to over 90 per cent. This indicates that higher blending has not reduced reliance on imported crude due to faster rate of oil consumption.

 

 

Petrol consumption grows, driving demand

 

Petrol consumption rose to 40 mt in FY25, a 7.53 per cent increase. In FY26, it stood at 38.8 mt till February, growing 6.3 per cent year-on-year and keeping demand elevated.