Center Exempts 22–30% Ethanol-Blended Petrol from Excise Duty

With a prospective eye to popularise the uptake of biofuels in the nation, the government late Wednesday exempted the central excise duty on petrol blended with a higher quantum of ethanol, from 22% to 30%.

As per the government notification shared with the media, petrol containing 22 percent to 30 percent ethanol will not draw excise duty. The exemption wraps fuel variants like E22, E25, E27, and E30. It marks the initial fiscal incentive for ethanol blends above E20.

Sources from the Ministry of Petroleum & Natural Gas told the media that the rollout of the excise duty exemption is subject to widespread testing and consultation. "The move aligns with updated BIS standards... No decision on rollout of higher blends yet." The decision on Ethanol blended petrol comes from the side of India, which is steadily expanding its biofuel program to reduce dependence on imported crude oil and promote cleaner, domestically made energy.

The latest tax exemption may seem technical, but it also holds a broader message. For years, India's ethanol blending program primarily focused on getting the E20 target. That goal of biofuels is now within reach. The government's new move implies that the policymakers are already making the groundwork for what is coming next.

The National Policy on Biofuels was first introduced in 2018 and amended in 2022. The new target is to achieve 20 percent ethanol blending in petrol from 2030 to the Ethanol Supply Year 2025-26.

The results of the changes have been considerable. Public sector oil marketing organizations achieved about 10 percent blending in June 2022, which is five months ahead of plan.