Govt Mandates 20% Ethanol-Blended Petrol from April 1, 2026; Key Stocks in Focus

The notification stated that oil companies shall sell Ethanol Blended Motor Spirit with ethanol up to 20% as per BIS specifications and having a minimum RON of 95 in states and Union Territories. In special circumstances, the government may allow oil marketing companies to sell ethanol-blended petrol meeting only the required RON specifications for specific regions and limited periods.

Why RON 95 Is Mandatory

RON (Research Octane Number) measures a fuel’s resistance to engine knocking or pre-ignition. Knocking happens when fuel burns unevenly inside the engine, causing a pinging sound, loss of power and possible long-term engine damage. Higher RON means greater resistance to knocking and smoother engine performance.

Ethanol naturally has a high octane rating of around 108 RON. Blending 20% ethanol with petrol improves knock resistance. The mandatory minimum RON of 95 is aimed at preventing engine damage and ensuring compatibility with modern engines.

Policy Push and Targets

After achieving 10% ethanol blending in petrol in June 2022, five months ahead of schedule, the government advanced the 20% blending target to 2025-26 from the earlier 2030 deadline. Most fuel stations across the country now retail E20 petrol.

According to the oil ministry, India has saved over ₹1.40 lakh crore in foreign exchange since 2014-15 through petrol substitution with ethanol blending. The move aims to cut crude oil imports, reduce emissions and support farmers by boosting demand for sugarcane, maize and surplus grains.

Impact on Vehicles

Industry officials said most vehicles manufactured between 2023 and 2025 onward are designed to run on E20 without major issues. However, older vehicles may see a mileage drop of around 3% to 7%. There could also be gradual wear in rubber and plastic components in vehicles not originally built for higher ethanol blends.

Stocks in Focus After the Announcement

Following the notification, shares of oil marketing companies and ethanol-linked players were in focus on Friday, February 27.

Indian Oil Corporation rose around 1.3% in early trade, while Bharat Petroleum Corporation declined by nearly 0.3%. Hindustan Petroleum Corporation was down about 1% during the session.

Among ethanol and sugar-related stocks, Balrampur Chini Mills advanced over 7%, while Dalmia Bharat Sugar and Industries added around 1.75%. Praj Industries gained nearly 6% amid expectations of sustained demand for ethanol infrastructure.

The nationwide rollout of E20 petrol with a minimum RON of 95 marks a major step in India’s energy transition strategy, strengthening energy security, supporting agriculture and reducing environmental impact while maintaining engine safety standards.