India's Ministry of Petroleum and Natural Gas mounted a fresh defence of its E20 ethanol blending programme on Sunday, warning that abandoning the policy would strand billions of rupees already invested in ethanol production and distribution infrastructure. The ministry rejected consumer complaints over falling fuel efficiency.

The E20 policy, which mandates petrol blended with 20% ethanol, was rolled out ahead of schedule to reduce India's crude oil import bill and support farm incomes. The government has committed sugar mills and distilleries to large-scale ethanol capacity, backing the expansion with subsidies and interest-free loans.

Critics, including sections of the automobile industry and vehicle owners, have argued that older engines not designed for higher ethanol content suffer reduced mileage and potential component damage. The ministry countered that most vehicles sold since 2023 are compatible and that efficiency losses are marginal, citing its own technical assessments.

The defence comes as the government seeks to protect a policy central to its energy security and rural economy goals. Industry bodies such as the Society of Indian Automobile Manufacturers have called for clearer labelling and consumer guidance, while ethanol producers have urged the government to hold firm to preserve their investments.

Analysts at rating agencies including ICRA have noted that any policy reversal would hit sugar and ethanol producers hardest, given the capacity built specifically to meet blending targets set by the National Biofuels Policy.