The Truth About Ethanol and the Motives Behind It — What Is the Full Reality?

The moment the word ethanol is mentioned, a series of questions probably begins to echo in your mind. Some of those questions are genuine, while others are half-baked, exaggerated, or poorly understood. Most people today inevitably encounter the so-called “WhatsApp University,” where discussions often circulate claiming that India’s ethanol policy is closely linked to the business interests of the Union Transport Minister and his sons. You might also have come across claims suggesting that the government’s decision to blend ethanol with petrol helped massively expand the financial empire of companies associated with the family of Union Minister Nitin Gadkari.

Newstrack has therefore taken the initiative to fact-check such claims that circulate widely on social media. This is our first effort in that direction. Whenever necessary in the future, we will continue to examine the “knowledge” spreading through the social media ecosystem and attempt to separate fact from fiction.

Let us first understand what ethanol actually is.

Ethanol is a liquid biofuel, which means it can be burned in engines as fuel. It can be easily used in internal combustion engines like those that run on petrol. One of its advantages is that it produces comparatively lower carbon emissions. For this reason, apart from motor vehicles, some small aircraft, boats, and speedboats can also run on ethanol or ethanol-blended fuels. In other words, it would not be unrealistic to say that aircraft may one day fly on ethanol. This is not merely fantasy — it could become a practical reality in the future.

However, ethanol does present certain challenges when it comes to large cargo or container ships. Most ships operate on diesel engines. Running them on ethanol would require modifications to both the engine and the fuel system. Nevertheless, experimental initiatives have already begun in some countries. In Sweden and other parts of Europe, certain ferry vessels are already operating on ethanol-blended fuels. For now, ethanol is primarily used in road transport and petrol blending.

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The Situation in India

In India, under the Ethanol Blending Programme, the government has adopted a policy of mixing ethanol with petrol to reduce fuel imports and lower pollution levels. The government is also promoting flex-fuel engine technology, which can run on fuel mixtures containing up to 85 percent ethanol. This technology is widely used in Brazil.

The first initiative in India to blend ethanol with petrol was approved during the government of Atal Bihari Vajpayee. At that time, the objective was to reduce the heavy financial burden of petroleum imports. The policy proposed blending five percent ethanol with petrol in four-wheeled vehicles. This initiative came to be known as the Ethanol Blending Programme. Later, the United Progressive Alliance (UPA) government expanded and continued the policy.

In 2018, under the National Biofuel Policy, the government introduced new measures to increase ethanol production. The policy allowed ethanol production not only from sugarcane but also from rice and maize.

Between 2021 and 2023, the government announced the target of achieving 20 percent ethanol blending (E20). Initially the target year was set as 2030, but it was later advanced to 2025-26. Union Transport Minister Nitin Gadkari advocated strongly for this transition, which led some critics to accuse him of pushing the policy in order to benefit companies linked to his sons.

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Hundreds of Companies Are Producing Ethanol

In India, ethanol is mainly produced from three sources: sugarcane molasses, sugarcane juice, and grains such as maize, rice, and broken rice. In recent years, grain-based ethanol plants have expanded rapidly.

Major ethanol production hubs in India include Uttar Pradesh, Maharashtra, Karnataka, Bihar, Punjab, and Haryana. These states host a large number of distilleries and sugar mills.

More than 400 to 500 companies are involved in ethanol production in India. Many of them are associated with sugar mills that produce ethanol from molasses. Some newer units are producing ethanol from maize.

Major ethanol-producing companies include Balrampur Chini Mills, EID Parry, Shree Renuka Sugars, Triveni Engineering, Dalmia Bharat Sugar, Bajaj Hindusthan Sugar, Dhampur Sugar Mills, Dwarikesh Sugar, HPCL Biofuels, Bannari Amman Group and several others. These companies play a significant role in both the sugar industry and the biofuel sector.

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Important Questions

A key question arises: Are our vehicles currently capable of running on ethanol-blended petrol? And are the sons of Nitin Gadkari actually involved in ethanol production or related businesses? If so, how much benefit have their companies gained from government policy?

Opposition leaders often claim that the father creates policy and the sons benefit from it.

Let us examine these allegations.

First, India’s ethanol blending policy was not formulated by a single minister. It is a collective policy decision of the central government. The policy began in 2003 during the Vajpayee government. Multiple ministries — including petroleum, agriculture, and food — are involved in implementing it. Therefore, the claim that Nitin Gadkari personally created the ethanol policy is factually incorrect.

Nitin Gadkari has two sons: Nikhil Gadkari and Sarang Gadkari. One of Nikhil Gadkari’s companies is named Siyan Agro Industries and Infrastructure Limited, while Manas Agro Industries is reportedly linked to Sarang Gadkari. These companies operate in the agro-processing and ethanol sectors.

The first company linked to Gadkari’s sons was established in 2015. Their business roots are often associated with the Purti Group, which was earlier linked to Nitin Gadkari but later came under the management of other family members.

According to available industrial data, Manas Agro and related facilities linked to the Purti Group produce roughly 80 to 85 million liters of ethanol annually.

India’s total ethanol production capacity is estimated at around 16 to 17 billion liters per year. However, due to raw material availability, actual production generally ranges between 10 and 12 billion liters. This means the ethanol production linked to companies associated with Gadkari’s sons accounts for less than one percent of India’s total ethanol supply.

Given this proportion, it becomes difficult to argue that India’s ethanol policy was designed primarily to benefit the Gadkari family. The allegations appear to be largely political in nature or based on incomplete information.

Thus, the controversy surrounding the ethanol business connected with Gadkari’s sons is not a proven corruption scandal. Rather, it represents a political debate about potential conflicts of interest between public policy and private business activity.

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Are Our Vehicles Ready for Ethanol Blends?

Another important question concerns vehicle compatibility with ethanol-blended petrol.

When the government implemented the ethanol blending programme, consultations were held with automobile manufacturers. For many years, India used petrol containing up to 10 percent ethanol (E10). Engines designed for E10 did not require major modifications, which is why most vehicles ran without difficulty.

For higher ethanol blends, certain changes are required in vehicles. Fuel pipes, rubber seals, and gaskets must be made from materials that are resistant to ethanol. Since ethanol has lower energy density than petrol, engine mapping and fuel injection timing must be adjusted. With E20 fuel, slightly more fuel is required, which means injectors and engine calibration must be modified.

According to both the government and automobile manufacturers, most vehicles manufactured in India after 2023 are compatible with E20 fuel. Older vehicles designed for E10 can also run on E20, though fuel efficiency may decline by around three to five percent. Some rubber components may wear out faster, and in very old engines corrosion problems could appear.

Flex-fuel engines can run on ethanol mixtures ranging from 20 percent up to 85 percent. Companies such as Maruti Suzuki, Tata Motors, and Hyundai have already begun producing E20-compatible and flex-fuel engines.

Modifications for E20 include changes in fuel pipes, rubber components, fuel injection systems, engine control unit calibration, and fuel tank materials. These changes are necessary because ethanol absorbs water and can corrode certain metals and rubber components more quickly.

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Check Your Vehicle’s Engine

Your vehicle manual usually clearly mentions fuel compatibility — either “E10 compatible” or “E20 compatible.” If only E10 is mentioned, the vehicle was originally designed for petrol containing up to ten percent ethanol.

According to the Indian government and automobile industry guidelines, most vehicles manufactured after April 2023 are generally E20 compatible.

You can also provide your vehicle’s VIN (Vehicle Identification Number) to the company’s service center to confirm whether your vehicle is compatible with E20 fuel.

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Why Is Ethanol Production Being Increased?

There are several reasons behind the push for ethanol blending: reducing petrol imports, increasing farmers’ income, and utilizing surplus production of sugarcane and grains.

The Indian government estimates that once 20 percent ethanol blending is fully implemented, the country could save around ₹30,000 crore annually in foreign exchange. This saving occurs because the country would need to import less crude oil or petrol.

After full implementation of E20, the estimated annual saving is about ₹30,000 crore. By July 2025, cumulative savings had already crossed ₹1.44 lakh crore. By February 2025, ethanol blending had reportedly reached approximately 19 percent, meaning India was already close to achieving the E20 target.

Another important point is that the ethanol programme is not just about foreign exchange savings. According to the government, the programme has also benefited farmers, sugar mills, distilleries, and the rural economy. A portion of the money that was previously spent on imported petrol is now being distributed within the domestic economy through payments to producers of sugarcane, maize, and other feedstocks.

India’s ethanol sector has now grown into an industry worth approximately ₹65,000 crore to ₹80,000 crore annually. Much of this revenue flows toward sugarcane farmers, sugar mills, distilleries, and related industries.

However, some experts and economists have also raised concerns. Sugarcane cultivation requires large quantities of water. Critics also argue that ethanol blending may reduce vehicle mileage slightly. Therefore, both support and criticism continue to exist regarding the policy.