A. BANERJEE, Stratas Advisors, Houston, Texas (U.S.)
This analysis is written for refiners, blenders, fuel marketers, policymakers and investors that need a clear view of how E20 is changing India’s gasoline system. India’s ethanol blending push is meant to bolster energy security, strengthen agriculture and industry value chains, and reduce carbon intensity. It is also reshaping the gasoline market: India’s gasoline pool grew from about 700,000 bpd in 2019 to around 974,000 bpd in 2025, while ethanol’s share has risen from 4% to about 19%–20% by volume. The result is a different pool with more content sourced outside refineries, and a new operating approach for refiners. In practice, that means building leaner base-pool recipes, letting ethanol carry more of the octane, and improving depot and terminal routines, such as adjusting volatility for the season, keeping tanks dry and separate, checking blend quality before loading, and maintaining steady ethanol deliveries across cities. These changes affect how gasoline is made and moved.
By itself, however, higher ethanol by volume does not produce a large cut in crude imports. Ethanol primarily displaces reformate in finished gasoline, while reformers can continue to run for aromatics and petrochemicals production, and middle-distillate demand still anchors crude runs. In effect, E20 lowers petroleum’s share of the gasoline blend while overall crude intake stays broadly steady. The transition is supported by diversified feedstocks and calibrated policy and delivers lower lifecycle emissions, with a modest energy-content tradeoff that most vehicles will feel as slightly lower mileage.
This insight covers:
India fuel specifications
Gasoline demand
Gasoline supply
Gasoline composition and what happens to reformate
The impact of octane and energy content
Crude demand in an E20 system
Emissions impact
What this means for ethanol suppliers
What this means for refiners, consumers and farmers.
India fuel specification. In India, fuel quality standards for gasoline and diesel were developed through the Auto Fuel Policy 2003, legislated under the Essential Commodities Act (1955) and classified under the Bureau of Indian Standards. They were implemented by the Ministry of Petroleum and Natural Gas with assistance from oil companies. The standards were modeled after European Union (EU) specifications and implemented in Bharat Stages (BS), which are equivalent to Euro standards.
Since April 1, 2020, BS-VI gasoline and diesel specifications have been enforced nationwide, requiring maximum sulfur limits of 10 parts per million (ppm). Specifications have been set for two gasoline grades [MG 91 (RON 91) and MG 95 (RON 95)], and high-speed diesel (HSD), which is primarily used in the on-road sector.
Following the E20 launch at India Energy Week (Feb. 6–8, 2023), fuel retailers began a phased rollout across major cities. Indian Oil started sales in 15 locations—including Bengaluru—on Feb. 6, 2023, with availability expanding toward nationwide coverage by April 2025. By the end of 2025, E20 has become available countrywide, and the average ethanol blend has effectively reached ~20% across the gasoline pool, with minor seasonal and regional variations. This reflects a steady ramp-up from around 15% average blending during 2024 as feedstock supply, distillery capacity and distribution logistics scaled to support E20.
The gasoline/ethanol grades currently available at the pump in India include:
RON 91 E10: Most common grade transitioned to RON 95 E20
RON 95 E10: Transitioned to RON 98 E20
E100: Select Indian Oil stations in Karnataka, Maharashtra, New Delhi, Tamil Nadu and Uttar Pradesh since March 15, 2024.
With BS-VI in place and E20 now available nationwide, the next question is scale: How large is the pool these grades must serve? The following section tracks gasoline demand growth and explains why a bigger, higher-octane pool makes ethanol a strategic ingredient.
Gasoline demand. India’s gasoline demand has been steadily increasing since the pandemic dip. It rose from approximately 700,000 bpd in 2019 to an estimated 974,000 bpd in 2025 (FIG. 1), an increase of 39% over 6 yrs. Following a low of 635,000 bpd in 2020, consumption rebounded year-over-year, reaching 796,000 bpd in 2022, 850,000 bpd in 2023 and 919,000 bpd in 2024. This translates to a compound annual growth rate (CAGR) of about 5.7% from 2019–2025. The growth was driven by rising ownership of two-wheelers and cars beyond metropolitan areas, improved highway infrastructure and increased household mobility. Seasonal factors such as festivals, harvest periods and summer travel add short-term surges on top of the trend.
As the pool expands, its composition is changing. Relying solely on petroleum components to meet grade can be costlier given import exposure and component pricing, while ethanol offers a way to supply octane, add domestic value and lower carbon intensity. Policy is steering the system toward E20, and ethanol is shifting from an optional blend to a strategic ingredient.
With consumption expanding and composition evolving, the next question is how those barrels are supplied. The following section shows how the mix shifts between refinery output and ethanol from 2019 to 2025.
Gasoline supply. As demand has increased, the supply mix has changed. In 2019, refineries supplied approximately 668,000 bpd, which accounted for about 95% of the total supply, while ethanol contributed around 34,000 bpd, or about 5%. By the end of 2025, refinery supply is expected to increase to around 785,000 bpd, representing about 81% of the total, while ethanol is projected to increase to about 186,000 bpd, or 19% (FIGS. 2 and 3). In total volume, ethanol is expected to add approximately 152,000 bpd from 2019–2025, which is slightly more than half of the total growth in supply (refinery output will increase by about 117,000 bpd).
This shift in supply has occurred in two phases: an initial increase from 2021–2022 as blending surpassed 10%, followed by a more rapid rise from 2023–2025 as capacity and logistics improved. As a result, the gasoline supply will no longer be entirely produced by refineries; ethanol has become a significant contributor to both volume and octane.
With ethanol supplying a larger share of the pool, the question shifts from who provides the barrels to what those barrels contain. The next section discusses the composition of the gasoline pool.
Gasoline composition: What happens to reformate? In an E0 world—where there are no oxygenates in the fuel blend—octane must come from refinery streams, with reformate contributing the majority. This keeps reformate at a 35.5% share of the overall pool, requiring its volumes to increase with demand, from about 249,000 bpd in 2019 to around 345,000 bpd in 2025. As ethanol use expands, some of this octane responsibility shifts away from reformate. In the scenario that includes ethanol, reformate's contribution decreased from about 207,000 bpd to 124,000 bpd between 2019 and 2025, and its share of the pool contracted from 29.5% to 12.8%. In 2025, this resulted in 221,000 bpd less reformate than what is required for E0 (FIG. 4).
The practical outcome of this shift is a leaner base pool with fewer aromatics, allowing for greater optimization of refinery value. Reformate molecules that are no longer necessary for octane production can be purified and redirected toward petrochemical processes, such as creating benzene, toluene and xylenes (BTX). This transition provides an additional revenue stream, while ethanol continues to supply reliable octane for finished fuel.
Octane impact: Ethanol lifts the pool. With the inclusion of ethanol in the blend, the pool octane level was expected to rise from 91 in 2019 to approximately 95 in 2025. In contrast, without ethanol, the octane level remained around 91 throughout this period. The increase was gradual, remaining flat through 2020 and then progressing to about 92 in 2021, 93 in 2022, 94 in 2023–2024 and reaching 95 in 2025 (FIG. 5). This improvement occured because ethanol contributes significant octane on its own—its research octane number (RON) is around 132. As the proportion of ethanol increases, the base pool requires less reliance on high-aromatic streams to meet the octane grade.
For vehicles, the higher pool octane enhances knock resistance and allows engines to operate smoothly without necessitating hardware modifications. For refiners, it results in decreased dependence on alternative octane boosters, such as heavy reformate aromatics or ethers like methyl tertbutyl ether (MTBE), while still adhering to BS-VI emissions standards (MG 91 and MG 95). In summary, ethanol takes on a larger share of the octane responsibility, enabling refineries to reduce the complexity of the gasoline blend and allocate their reforming capacities to where they provide the most benefit.
As reformate’s role in the blend shrinks and ethanol’s share grows, the focus shifts from what the pool contains to how it performs. The next section traces how overall octane changes as ethanol scales, and what that means for engines on the road and for blending choices at the rack.
Energy content impact. Ethanol has a lower energy density compared to petroleum gasoline, which means that as the proportion of ethanol increases, the overall energy content per barrel decreases. In scenarios that include ethanol, the energy content was approximately 3.5 MMBtu/bbl from 2019–2022, and then it dropped to around 3.4 MMBtu from 2023–2025. In contrast, when no ethanol was used, the energy content remained close to 3.6 MMBtu throughout this period. The difference in energy content was about 0.1 MMBtu/bbl (3%) early on, widening to approximately 0.2 MMBtu/bbl (about 5%–6%) in 2025.
For consumers, this decrease in energy content typically translates to slightly lower fuel economy [fewer kilometers traveled per liter, or fewer miles per gallon (mpg)], and a need for more frequent refueling. Fuel economy was around 3% lower initially, increasing to 5%–6% with E20 (a fuel blend with 20% ethanol), which is now effectively available nationwide. Actual outcomes can vary based on factors such as vehicle calibration, driving conditions, climate and maintenance practices. Although the higher octane rating from ethanol improves knock resistance, most vehicles on the road today are not tuned to take full advantage of this potential for efficiency gains. As a result, small efficiency improvement (if any) from octane is overpowered by the 5%–6% lower energy per barrel.
Crude demand in an E20 system: Limited impact, more flexibility. India’s growing gasoline use sits against a crude supply picture that is increasingly import-heavy. While road fuel demand has moved higher, domestic crude output has edged lower—from about 671,000 bpd in 2019 to 582,000 bpd in 2025 (a decrease of about 13%). Over the same period, crude imports have held near 4.4 MMbpd–4.5 MMbpd. That leaves imports supplying 87%–88% of refinery needs (about 4.45 MMbpd of 5.12 MMbpd in 2019, and 4.41 MMbpd of 4.99 MMbpd in 2025) (FIG. 7).
Ethanol displaces reformate in the gasoline recipe, but this does not automatically translate into proportionally lower crude runs. Reformers can keep operating to produce aromatics-rich reformate for BTX extraction, meeting domestic petrochemical demand and supporting exports. In integrated sites, naphtha that would have been upgraded for gasoline octane can be redirected to petrochemicals without cutting crude throughput; middle-distillate demand also anchors crude runs. The result is that ethanol reduces the petroleum share of the gasoline pool, yet the net crude requirement may fall only at the margin and only when aromatics demand or export outlets are soft enough to justify trimming reforming severity or crude intake.
In strong petrochemical cycles, crude runs may remain near planned targets, with the benefit of ethanol showing up as greater slate flexibility (less octane pressure in gasoline, more value in aromatics) rather than a one-for-one reduction in import volumes. For planning purposes, treat E20 as a lever that moderates crude exposure rather than a guaranteed, linear cut in crude imports.
Emissions impact: With vs. without ethanol. Blending ethanol into fuel reduces total fuel-related emissions when compared to an all-petroleum baseline, even as overall demand continues to grow. From 2019 to 2025, emissions for the scenario with ethanol were projected to range from 270 MMt CO2 equivalent (CO2e) to 335.2 MMt CO2e, compared to 271.2 MMt CO2e to 343.8 MMt CO2e in the scenario without ethanol (FIG. 8). The annual emissions gap increased with higher ethanol blending, with differences of about 1.2 MMt in 2019, 4.1 MMt in 2023, 4 MMt in 2024 and 8.6 MMt in 2025. This represents a reduction of 2.5% compared to the 2025 scenario without ethanol. Cumulatively, this results in approximately 23.5 MMt CO2e avoided from 2019 to 2025.
In summary, higher ethanol blending levels lead to a decrease in greenhouse gas emissions compared to using only petroleum, with the benefits increasing as the proportion of ethanol rises.
What it means for ethanol suppliers (and agribusiness). India’s ethanol industry is experiencing significant growth, with production capacity rising from over 74,000 bpd in 2019 to an expected 270,000 bpd in 2025 (FIG. 9). The rollout of E20 is shifting ethanol from a niche additive to a key component of gasoline, aided by supportive policies and a blending rate increase from about 5% in 2019 to 18% in 2024, approaching 20%.
The supply of feedstocks has diversified beyond molasses and cane juice to include maize, surplus rice and agricultural residues. Capacity growth involves sugar producers like Balrampur Chini and grain distillers like Globus Spirits, with production concentrated in Uttar Pradesh and Maharashtra, while new hubs are emerging in Bihar and Madhya Pradesh.
This expanding ethanol market offers farmers and millers stable sales opportunities, encourages crop diversification and reduces reliance on a single crop. As E20 becomes standard, suppliers with reliable feedstock and efficient logistics will be well-positioned to meet demand, enhancing rural incomes and strengthening local supply chains.
What it means for refiners, consumers and farmers.
Refiners. E20 shifts more of the octane duty to ethanol, so the gasoline base pool can be leaner in reformate. That frees aromatics-rich reformate for BTX/aromatics extraction or petrochemical naphtha sales and lets reformers be run for chemicals value rather than gasoline octane. Crude runs may not fall one-for-one: reformers can still operate to meet aromatics demand while ethanol supplies octane at the blender. Operational priorities: keep tight RVP control, water management and specification discipline at terminals as ethanol share rises.
Consumers. Pool octane steps up (91 to the mid-90s in 2025 with ethanol), improving knock resistance. The tradeoff is lower energy content, so most vehicles see a modest mileage dip, with real-world results dependent on calibration and driving conditions. Vehicles not certified for E20 may experience issues (materials compatibility, drivability); owners should follow original equipment manufacturer’s guidance and use the labeled grade.
Farmers. Higher, steadier ethanol blending creates predictable offtake and potential revenue uplift for sugarcane and grain suppliers, with diversified pathways (molasses/cane juice, surplus rice, maize, early cellulose based). This broadens participation beyond cane belts and helps smooth monsoon risk by adding grain/residue routes where suitable.
Takeaways. India’s shift toward E20 is changing the gasoline system in measurable ways. A larger pool (about 700,000 bpd to ~974,000 bpd from 2019 to 2025) now includes a much bigger ethanol slice (from ~5% to 19%–20%). That change lifts pool octane (roughly 91 to ~95 in 2025), reduces the need for aromatics-heavy reformate in finished gasoline (from ~29.5% to ~16.6% vs. ~35.5% in an E0 case), and lowers lifecycle emissions vs. an all-petroleum baseline (about 8 MMt COe–9 MMt COe lower in 2025). The main tradeoff is energy density: in 2025, the with-ethanol pool carries 5%–6% less energy per barrel than a no-ethanol pool, so most vehicles see a modest, real-world mileage dip.
On crude exposure, E20 moderates rather than eliminates the challenge. Domestic production continues to edge down while imports hold near 4.4 MMbpd–4.5 MMbpd, leaving import reliance high. Ethanol chiefly displaces reformate in the blend, but refiners can still run reformers hard for aromatics value, supplying BTX to domestic users and export markets. The result is less octane pressure inside the gasoline recipe, more flexibility to pivot toward petrochemicals and only a marginal reduction in crude runs unless aromatics demand softens.
What happens next depends on disciplined execution. For refiners, the opportunity is a leaner base pool and a stronger chemicals pathway; for consumers, higher octane and stable grades alongside a small efficiency penalty; for farmers and rural industry, steadier offtake and income as diversified feedstocks scale. Keeping E20 reliable year-round will require tight Reid vapor pressure (RVP) and water control, terminal quality assurance and resilient logistics, plus continued diversification of feedstocks to manage water and monsoon risks. If those pieces hold, E20 delivers on its core aims: to moderate import exposure, lift rural value added and lower carbon intensity, while preserving fuel performance. HP
Aditya Banerjee has more than 15 yrs of experience in the downstream sector. His consultancy background covers the Americas and global refining and chemicals markets, specializing in economic and fundamental analysis, including forecasting for refined and petrochemical markets. Before joining Stratas Advisors, Banerjee served as a Senior Associate at Sapient Consulting and as a Research Analyst at Wood Mackenzie. In these roles, he developed expertise in data analytics, particularly focusing on the refinery supply chain, encompassing supply and demand balances. Commencing his career in 2007 as a Process Engineering Intern at Reliance Industries Ltd. in Jamnagar, India, he subsequently worked with Larsen and Toubro Research and Development department in Mumbai, India. Banerjee earned a BS degree in chemical engineering from the Institute of Chemical Technology in Mumbai, India, and an MS degree in environmental analysis from Rice University.