Seen from New Delhi, ethanol blending trims the oil bill less than claimed

Summary

In a piece published on 12 October by New Delhi-based CSEP, Reet Lath and Shyamasis Das argue that the mandate to blend 20% ethanol into petrol (E20) has not cut India's crude imports as much as official messaging implies. India imports about 90% of its crude needs and paid $137 billion for them in 2025. Official statements credit E20 with foreign-exchange savings of about $24 billion, or 1.97 lakh crore rupees, so far; the authors say the arithmetic behind that figure is unclear.

Their core objection concerns the make-up of the barrel: only 15–18% of the products from a barrel of crude is petrol, while 44–45% is diesel. Between 2020-21 and 2024-25 India consumed 503 million tonnes of diesel and 200 million tonnes of petrol. Refiners can raise middle-distillate yields by only 2–3%; when petrol demand falls, a refinery does not process less of the same barrel but produces surplus naphtha.

In a counterfactual using 2018-19 as the base, the 20% blend and ethanol's lower energy content together cut petrol consumption by 15.56%, or 4,402 thousand tonnes. That is equivalent to about 5.87 billion litres and is worth at most 40,973 crore rupees at today's prices. The authors say the real lever is diesel: biodiesel capacity is 520 million litres, but utilisation is 34.6% and blending is below the 5% target. Their two main recommendations are to assess biofuel strategy against the whole barrel and to make demand reduction a priority.