Centre waives excise duty on petrol with 30% ethanol.
India expands ethanol blending policy, amends excise duty rules.
Centre Waives Excise Duty on Petrol with Up to 30 Per Cent Ethanol
The exemption was announced through a notification issued by the Ministry of Finance on Thursday, June 11.
As per the notification, excise duty has been set at nil for ethanol-blended motor spirit conforming to Bureau of Indian Standards (BIS) specifications. This covers blends where ethanol content ranges from 22 per cent to 30 per cent by volume.
The notification also addresses applicable central, state, Union Territory or integrated taxes on ethanol and duty-paid petrol components.
India’s Push for Ethanol Blending
The amendment follows India’s push to expand ethanol blending in petrol as part of its broader biofuel policy aimed at reducing crude oil imports and promoting domestic renewable fuel usage. The government has steadily increased ethanol blending levels in petrol in recent years, supported by policy changes under the National Policy on Biofuels and corresponding targets advanced to 2025-26.
India is one of the world’s largest importers of crude oil, and every percentage point increase in ethanol blending helps save foreign exchange while providing a market for sugarcane farmers and other feedstock producers. Ethanol is primarily derived from sugarcane molasses, but the government is also encouraging production from grains, crop residues, and other biomass sources.
The excise duty waiver is expected to make higher-blend ethanol petrol more price-competitive at the pump, encouraging oil marketing companies to offer these variants and consumers to choose them. Currently, E20 petrol (20 per cent ethanol, 80 per cent petrol) is already available at many fuel stations across the country, and the government aims to achieve nation-wide rollout of E20 by 2025.
Share of Ethanol in Petrol Rises to 10 Per Cent
E85 contains 85 per cent ethanol and 15 per cent petrol, and is designed for vehicles with flex-fuel engines that can run on varying ethanol-petrol ratios.
Union Petroleum and Natural Gas Minister Hardeep Singh Puri has highlighted India’s progress in ethanol blending. Speaking on the country’s achievements, Puri noted that the share of ethanol in petrol has risen from just 1.5 per cent in 2014 to 10 per cent achieved in June 2022. He further revealed that the 20 per cent blending target, originally set for 2030, was completed ahead of schedule in 2024 itself.
“From 2014 until now, we have increased ethanol blending from 1.5 per cent to 10 per cent, which was achieved in November 2022.
Economic and Environmental Benefits
The ethanol blending program offers multiple benefits. Economically, it reduces India’s reliance on imported crude oil, saving billions of dollars annually in foreign exchange. Environmentally, ethanol burns cleaner than pure petrol, reducing emissions of carbon monoxide, hydrocarbons, and particulate matter. Additionally, the program supports rural livelihoods by creating a stable market for sugarcane farmers and generating employment in ethanol distilleries.
However, challenges remain. Higher ethanol blends require engine modifications in older vehicles, and the availability of feedstocks can fluctuate with agricultural seasons. The government is addressing these issues through vehicle compatibility standards and by diversifying ethanol production sources.
With the excise duty waiver now in place for blends up to 30 per cent, India has signaled its commitment to accelerating the transition toward higher ethanol utilisation, positioning itself as a global leader in biofuel adoption.