The Centre has exempted several categories of higher ethanol-blended petrol from central excise duty, marking another step in India’s effort to expand the use of cleaner and domestically produced fuels.
According to a notification issued by the Finance Ministry, petrol blended with 22 per cent, 25 per cent, 27 per cent and 30 per cent ethanol will now attract a ‘Nil’ rate of excise duty. The exemption covers multiple levies, including basic central excise duty, special additional excise duty, road and infrastructure cess, and the Agriculture Infrastructure and Development Cess (AIDC).
The move broadens the government’s tax support for ethanol-blended fuel beyond the existing blending framework.
Which fuel blends have been exempted?
The notification introduces four new fuel categories under the Central Excise framework:
E22: 78% petrol and 22% ethanol
E25: 75% petrol and 25% ethanol
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E27: 73% petrol and 27% ethanol
E30: 70% petrol and 30% ethanol
All four categories have been assigned a zero excise duty rate.
Part of a larger ethanol expansion plan
The exemption comes shortly after India introduced E85 fuel for flex-fuel vehicles on World Environment Day. E85 is a fuel blend containing 80-85 per cent ethanol and 14-19 per cent petrol.
Unlike conventional petrol, E85 is designed for flex-fuel vehicles that can operate on different ethanol concentrations, ranging from E20 to E100.
The latest tax relief is expected to support the wider adoption of higher ethanol blends as the country works toward increasing the share of biofuels in the transportation sector.
Reducing dependence on imported crude
India remains heavily dependent on imported crude oil, with nearly 90 per cent of its requirements sourced from overseas markets. This exposes the country to fluctuations in global oil prices and supply disruptions caused by geopolitical developments.
In recent years, ethanol blending has emerged as a key component of India’s strategy to reduce fuel import dependence and lower the outflow of foreign exchange.
The government’s push for higher ethanol usage has gained added significance amid concerns over energy security. Challenges linked to crude oil supply routes, including disruptions affecting the Strait of Hormuz, have highlighted the importance of diversifying fuel sources and strengthening domestic alternatives.
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With the latest excise duty exemption, the government has extended fiscal support to higher ethanol-blended petrol variants as it continues to promote alternative fuels and reduce reliance on imported energy.
FAQs:
Is ethanol-blended petrol available in India?
Yes, E20 ethanol-blended petrol is now available across all states and Union Territories in India.
Is E20 petrol cheaper than regular petrol in India?
No, E20 petrol is generally priced similarly to regular petrol despite containing 20% ethanol.
