E20: Guide to Car & Portfolio Health
The E20 ethanol blend dominated headlines through August and September 2025, but as the buzz fades, understanding its deeper implications becomes even more important, especially if you’re wondering about reduced mileage, corrosion, or the bigger economic story playing out behind the scenes.
Here’s what you need to know before dismissing it as just another regulatory compliance exercise.
What is E20, really?
The “E” in E20 stands for Ethanol, a clear, colorless, renewable biofuel made from fermenting plant materials like sugarcane or corn. The “20” indicates a 20% ethanol blend with 80% petrol.
In vehicles, ethanol blends like E20 provide higher octane (108.5 vs. petrol’s 84.4) for smoother combustion, but here’s the trade-off: they have 30% less energy per gallon than pure petrol, leading to slightly lower mileage and corrosive effects on non-compatible engines due to ethanol’s water-attracting hygroscopic property. This is why you’ve heard complaints about corrosion in vehicles after using ethanol-blended fuels.
You might have also heard supporters citing E20 as good for our farmers. There’s truth there.
But the real story is far more complex and financially significant than the headline suggests.
What India’s E20 timeline tells us
All the buzz about ethanol blending in India isn’t new.
Brazil and the United States have been doing this for decades, aiming to reduce oil imports, cut emissions, and boost agricultural economies. So what makes India’s case different?
Brazil kicked off its Proálcool programme in the 1970s, taking roughly 30 years (until the early 2000s) to reach the point where drivers could freely choose their fuel through flex-fuel vehicles (FFVs). FFVs are cars built to run on regular gasoline, E85 (85% ethanol mixed with gasoline), or ANY mix in between.
India’s timeline is dramatically shorter. The formal push for 10% ethanol petrol began around 2013, and by 2025, the country achieved 20% blending. That’s barely 5–6 years, a pace way faster than Brazil’s gradual evolution.
Why should this matter to you as an investor?
Fast timelines mean money gets invested in a rush, creating big opportunities for winners but also quicker risks for everyone else. More on that later.
The price promise vs. the reality
Generally, ethanol fuel is introduced with the goal of lower prices for drivers since it’s cheaper to produce from crops like sugarcane compared to imported petrol. In Brazil, this worked beautifully- ethanol generally sells for 25-30% less than gasoline.
India promised the same when rolling out E20. The reality? In most regions, E20 is priced exactly like regular petrol at ₹100-105 per liter.
Here’s the frustrating math: If E20 cuts mileage by 2-8%, your actual cost per kilometer goes up, not down. You’re paying the same price for less distance. And of course, the burden falls entirely on consumers.
The root problem isn’t inefficiency. It’s the absence of consumer choice.
India neither has an established system to introduce flex-fuel vehicles (FFVs) that can handle higher ethanol levels, nor does it offer drivers the option to choose between E0, E5, E10, and E20 at pump stations. Most people are stuck with standard cars that weren’t fully designed for E20. This creates a forced adoption scenario for them.
But all problems must have solutions too. Before we get into your practical options, though, let’s talk about what’s actually happening behind the scenes because there’s a much bigger financial story here.
The silent wealth transfer
Here’s what most news sources won’t tell you: E20 isn’t just energy policy. It’s a systematic capital reallocation mechanism redirecting ~₹85,000 crore annually from crude oil imports to domestic agricultural and industrial ecosystems.
Let’s break down the money flow:
Annual Economics at Full E20 Blending:
Crude oil import savings for India: ₹43,000 crore
Total ethanol procurement value annually: ~₹85,000 crore (at current retail pricing)
Direct farmer payments: ₹40,000+ crore in 2025 alone
Cumulative forex saved since 2014: ₹1.44 lakh crore
The critical question remains: Who is the ₹85,000 crore annually flowing to?
There’s no one answer to this.
Who’s actually getting rich
Sugar Mills & Distilleries
Even though Ethanol production capacity is primarily concentrated among sugar mills, new entrants like Coastal are becoming significant
Here’s the critical difference: unlike commodity sugar production (hyper-competitive, margin-compressed), ethanol operates under government-guaranteed pricing.
This gives existing producers a competitive advantage
Companies like Shree Renuka Sugars, and Triveni Engineering have pivoted from sugar production tied to seasonal ups and downs, to steady ethanol production. All this, because:
The blending targets ensure Oil Marketing Company (public sector companies responsible for refining, distributing, and selling petroleum products) must buy all the ethanol produced, giving mills reliable sales.
There is a fixed minimum price set by the government. For sugarcane-based ethanol, it’s ₹65.61 per liter, and this price adjusts based on global crude oil rates.
Coastal Corporation
Coastal Corporation, traditionally a seafood processing and export company, has diversified into ethanol production through its subsidiary Coastal Biotech Private Limited.
They operate a 198 KLPD grain-based ethanol plant in Odisha (commissioned in April 2025). The company secured a ₹361.73 crore ethanol supply order in October 2025 from Oil Marketing Companies and Reliance Jio BP.
This company represents a new category of ethanol producer- not a traditional sugar mill or distillery operator, but a company pivoting from one sector (seafood) into biofuels. They’re riding the E20 wave as a newcomer entering a growing market
…
The Super 30 Fund smallcase from Green Portfolio includes high-growth stocks like Coastal Corporation that targets high-reward turnaround stocks in special situations like new leadership, company mergers, or debt reduction, offering substantial medium. Check the portfolio HERE
Praj Industries
Praj Industries build the equipment needed for distilleries, like machines for producing biofuels and biogas systems.
Here’s why this is important: The huge ₹40,000 crore spent on building new distilleries means steady work for companies like Praj for the next 20 years. Every time a sugar mill expands, it means more orders for Praj.
Right now, Praj has a backlog of orders worth over ₹3,000 crore, with good profit margins of 28-32% on these distillery projects (compared to 15-18% for regular equipment).
If you invest in a company like Praj, this investment strategy would be called Proxy play. Proxy play a strategic investment plan where investors gain exposure to desired sectors or companies indirectly through related stocks or proxies. This is something Green Portfolio is expert at. Check our Smallcase, PMS, AIF.
The Farmers
Farmers are the most genuine winner in the E20 narrative, but benefits are concentrated in specific states:
Sugarcane farmers are benefiting most in Maharashtra, Uttar Pradesh, and Karnataka through guaranteed ethanol procurement at government-set prices.
Maize farmers are gaining traction in Uttar Pradesh and Bihar as the government pushes maize as a preferred ethanol feedstock.
Overall, the government has funneled significant payments to farmers across these regions, making agriculture a real beneficiary of the E20 rollout.
The macro layer theory
We can’t predict the future, but we can study patterns from the past and understand the theories shaping tomorrow. Here, we examine India’s energy future through the lens of E20:
India imports 67% of its crude oil, creating both economic and geopolitical vulnerability to global price shocks and supply disruptions. E20 systematically reduces this dependency by replacing imported crude with 20% domestic ethanol, saving ~₹43,000 crore annually in forex.
Theoretically, over 10-15 years, this builds energy autonomy and strengthens India’s macro fundamentals- lower inflation, stable rupee reserves, and reduced exposure to oil market volatility.
For global investors, this translates to lower macro risk and makes India a more attractive long-term destination for capital. Since international funds view energy independence as a lucrative factor, this can attract steady foreign investment into India equities and bonds. This cycle might reinforce INR appreciation and India asset valuations.
What can you do
While macro factors may or may not turn into favour of a successful Indian story, we can’t also ignore the current concerns. So here are the actionable steps
for Vehicle Owners:
Update your car documents and insurance to include E20-related damage coverage (add-ons cost ₹500-1,000/year)
Consider shifting to newer E20-compliant vehicles if you drive frequently; the mileage penalty compounds over time
Adopt CNG as a cleaner, cheaper alternative if available in your region
for Investors:
Look for companies involved in ethanol production, distillery equipment, or agro-processing as these are direct beneficiaries of government demand and policy support.
The more E20 gets adopted and the busier the distilleries, the better for companies in this space. So, monitor how widely E20 fuel is actually being used and whether distilleries are running at near capacity.
Consider investing in supporting sectors like agri-tech, water management, and CNG infrastructure, which will also benefit from the energy transition and policy incentives.