Govt Waives Excise Duty on Ethanol-Blended Petrol

New Delhi: India has abolished excise duty on petrol blended with higher levels of ethanol. Petrol containing 22 per cent to ‌30 per cent ethanol will be exempt from excise duty. The Centre, however, aims to extend fiscal support to fuel variants above the country’s current E20 petrol standard, the government said on Thursday.

The move of the government comes after petrol and diesel prices in the country were hiked over Rs 7.5 per litre since the Middle East crisis began. The move is part of the government’s broader push to expand the use of ethanol, with plans to open 50-100 ethanol fuel stations in Delhi-NCR, Pune, Mumbai, Nagpur and scale up the network to 500 by the end of 2026.

As per the notification issued by the finance ministry, the exemption applies to blends commonly referred to as E22, E25, E27 and E30, depending on the proportion of ethanol mixed with petrol. “These blends consist of 78 per cent, 75 per cent, 73 percent and 70 per cent motor spirit mixed with 22 per cent, 25 per cent, 27 per cent and 30 per cent ethanol by volume, respectively,” the ministry said.

The decision of the government comes as India steadily expands its bio-fuel programme to reduce dependence on imported crude oil and promote cleaner, domestically produced energy. However, a government source said that this rollout is subjected to extensive testing and consultation with all stakeholders in this matter. “The move aligns with updated BIS standards. No decision on rollout of higher blends yet,” the source added.

As energy supplies across the globe are under pressure due to the ongoing Middle East war, the government in March this year, had cut excise duty on petrol and diesel by Rs 10/litre, foregoing over Rs 1 lakh crore of annual revenue. This was aimed at shielding domestic customers from the surge in global crude oil prices amid the West Asia crisis.

Union minister Puri had earlier said that state-run oil marketing companies are preparing to offer E85 fuel at a discount of Rs 20 per litre compared with E20 petrol. The discount is aimed at offsetting the lower energy content of the fuel.