What made SIAM do a U-turn on E20 fuel within a week?

Why the industry's public position changed is difficult to say. What the developments did establish, though, is that ethanol-blended petrol has become one of the country's most politically and commercially sensitive policy issues.

On July 28, the Society of Indian Automobile Manufacturers (Siam) wrote to Petroleum Secretary Neeraj Mittal with what appeared to be an urgent request.

The industry body said its members were seeing a "huge increase" in failures of vehicle components such as fuel injectors, fuel pumps, exhaust gas recirculation (EGR) valves, and other parts coming in direct contact with fuel or engine emissions.

Investigations into failed parts, it said, pointed to corrosion and wear caused by high chloride contamination in E20 fuel -- 20 per cent ethanol mixed with petrol.

Fuel samples collected from vehicles had shown chloride levels of up to 500 parts per million (ppm), while samples collected from retail outlets showed contamination of up to 350 ppm, according to the letter.

It also flagged unusually high moisture levels in some fuel samples, warning that excess water could cause phase separation -- a condition in which ethanol and petrol separate -- leaving vehicles unable to run immediately after refuelling.

The industry's request to the government was straightforward.

Siam urged the ministry of petroleum and natural gas (MoPNG) to introduce mandatory chloride limits in fuel specifications through the Bureau of Indian Standards (BIS), direct oil marketing companies (OMCs) to identify the source of contamination, and strengthen fuel quality controls.

Change in stance

Less than a week later, Siam's public position took a dramatic u-turn.

On August 4 night -- after the letter had entered the public domain and MoPNG had issued a clarification defending the E20 programme -- Siam said the figures cited in its communication required "authentication through collection of elaborate data from various regions across the country followed by a comprehensive consultation with our member OEMs."

The correspondence, it said, was part of "routine and ongoing technical deliberations" between industry, oil companies and government agencies, and reassured consumers that there was "no cause for concern" -- before formally withdrawing its earlier communication.

The contrast between the two documents is difficult to miss.

In one, Siam cited specific contamination levels, linked them to field failures and sought immediate regulatory intervention.

In the other, it said those figures required further validation before any conclusions could be drawn.

Why the industry's public position changed is difficult to say.

What the developments did establish, though, is that ethanol-blended petrol has become one of the country's most politically and commercially sensitive policy issues. That sensitivity is understandable given what is at stake.

For the Union government, ethanol blending is a key pillar of India's energy security strategy, aimed at reducing crude oil imports, saving foreign exchange and creating an additional market for agricultural produce.

For automobile manufacturers, the priority is ensuring vehicle durability after spending years redesigning engines and components to make them compatible with E20 fuel.

For vehicle owners, however, the concerns are more immediate.

Several consumers have taken to social media and other public forums complaining of lower mileage after shifting to E20 petrol, while some have also reported maintenance-related issues.

The complaints have become an important part of the debate, although the government and automobile industry have maintained that E20 does not cause widespread engine damage.

Road transport and highways minister Nitin Gadkari told Parliament recently that fuel efficiency could decline by 2-6 per cent depending on the age and type of vehicle, while stating that testing had failed to link engine failures with E20 use.

This explains why what began as an engineering discussion quickly morphed into a broader political debate.

Aam Aadmi Party national convenor and former Delhi chief minister Arvind Kejriwal has emerged as the most vocal political opponent of the E20 rollout.

Over the past week, he has demanded that consumers be given a choice between E20 and pure petrol, stating that motorists should not be compelled to use a fuel blend if they have concerns about vehicle compatibility or fuel efficiency. His party has also held protests on the issue.

The debate soon acquired an institutional dimension when the Punjab Assembly on August 4 passed a resolution urging the Centre to suspend mandatory E20 rollout for vehicles that are not certified to run on the blend.

Yet the geography of the controversy is as revealing as the politics.

The loudest political opposition has come from Punjab, while states that account for much of India's ethanol production -- such as Uttar Pradesh, Maharashtra, Karnataka, Bihar and Gujarat -- have largely stayed away from the debate.

These states are home to a large share of the country's distilleries, which produce ethanol from sugarcane-based feedstocks such as molasses, sugar syrup and sugarcane juice, as well as grain-based feedstocks including maize and surplus or damaged foodgrains.

For them, ethanol has become an important rural industry, providing an additional source of revenue for sugar mills, grain processors and farmers.

The contrasting positions were evident even on Tuesday.

While Punjab opposed the E20 rollout, Union agriculture minister Shivraj Singh Chouhan met farmer organisations that backed the ethanol blending programme.

According to a statement issued by the agriculture ministry, farmer representatives said that they are in favour of ethanol and that their only demand is for the real benefit of this programme to reach farmers and not only companies or middlemen.

Chouhan said that the thought process of the Central government is clear -- the benefit of the ethanol programme should reach the entire chain, from the field to the fuel tank, but the largest share, he agreed, should go to the farmer.

Technical to political

To understand how a technical letter sparked a national political debate, one must look at how rapidly the policy has moved from a modest pilot to a nationwide programme.

The ethanol blended petrol (EBP) programme began as a pilot in 2001 before being formally launched in 2004 with the objective of blending 5 per cent ethanol with petrol.

Progress remained slow for several years because ethanol production was limited, pricing policies were uncertain and OMCs struggled to secure supplies.

The programme gathered momentum after 2014, when the Centre introduced assured procurement prices for ethanol and expanded the list of approved feedstocks beyond molasses to include sugar syrup, sugarcane juice, maize, and surplus or damaged foodgrains.

The turning point came in 2021, when an inter-ministerial committee chaired by the NITI Aayog prepared a roadmap for the transition to E20.

The committee included representatives from the ministries of petroleum, road transport, agriculture and food, along with Siam, OMCs, testing agencies and automobile manufacturers.

The original target of achieving 20 per cent ethanol blending by 2030 was subsequently brought forward to the ethanol supply year (ESY) 2025-26.

That decision followed the NITI Aayog roadmap, which concluded that ethanol production capacity and vehicle readiness were progressing faster than originally envisaged.

The rollout then accelerated.

Average ethanol blending increased from 8.1 per cent in ESY 2020-21 to 10 per cent in 2021-22, 12.1 per cent in 2022-23, 14.6 per cent in 2023-24 and 19.2 per cent in 2024-25 before reaching the 20 per cent target in ESY 2025-26, five years ahead of the original schedule.

During the same period, ethanol procurement by OMCs increased from about 380 million litres in ESY 2013-14 to more than 12 billion litres in ESY 2025-26, while installed production capacity expanded to around 20 billion litres annually.

Just after the E20 target was achieved in 2026, government officials began discussing the technical feasibility of higher ethanol blends such as E25 and E30.

However, the Centre recently clarified in Parliament that no decision has been taken to mandate blending beyond E20, and any future move will follow technical studies and consultations with stakeholders.

Not just about fuel

The July 28 Siam letter cited above did not question the ethanol blending programme itself.

In fact, it reiterated the automobile industry's support for the government's biofuel policy and referred to ongoing discussions on future programmes involving higher ethanol blends.

Its main argument was that fuel quality controls must keep pace with higher blending levels.

The letter said contamination in fuel could create "a wrong impression about the E20 fuel in customers' minds" and urged the government to address the issue immediately.

It also noted that Siam members had been raising the chloride issue before the BIS committee for more than two years, but mandatory limits were yet to be incorporated into fuel specifications.

India's ethanol journey has reached a point where it is no longer just a fuel policy.

It is now tied to farm incomes, sugar industry economics, energy security, automobile technology and vehicle owners' experience.

The events of the past week underline the challenge before policymakers: Managing a transition that involves multiple stakeholders, each with a different stake in the outcome.