Centre Waives Excise Duty on High-Ethanol Petrol Blends to Boost Green Fuel Push

New Delhi: In a significant move to promote cleaner fuels and accelerate India's biofuel programme, the Centre has exempted petrol blended with higher levels of ethanol from excise duty, covering fuel variants with ethanol content ranging from 22 per cent to 30 per cent.

According to a notification issued by the Ministry of Finance, excise duty has been reduced to nil on ethanol-blended motor spirit that meets the prescribed Bureau of Indian Standards (BIS) specifications. The exemption applies to petrol blends containing 22 per cent, 25 per cent, 27 per cent and 30 per cent ethanol by volume.

The notification, issued under Section 5A of the Central Excise Act, 1944, introduces duty-free treatment for fuel categories such as E22, E25, E27 and E30, which are mixtures of petrol and ethanol in varying proportions.

The decision is aimed at encouraging the adoption of higher ethanol blends as part of India's broader strategy to reduce dependence on imported crude oil, strengthen energy security and promote the use of domestically produced renewable fuels.

The move comes as the government continues to expand its ethanol-blending programme under the National Policy on Biofuels. Over the past decade, India has significantly increased ethanol use in petrol through policy support and enhanced production capacity.

Recently, the government also introduced E85 fuel, designed for compatible flex-fuel vehicles, further expanding the range of ethanol-based fuel options available in the country.

Highlighting the progress made so far, Union Minister for Petroleum and Natural Gas Hardeep Singh Puri said ethanol blending in petrol has risen sharply from 1.5 per cent in 2014 to 10 per cent by 2022.

He noted that while the government's original target was to achieve 20 per cent ethanol blending by 2030, the milestone was reached much earlier, in 2024.

Officials believe the latest tax exemption will further incentivise the production and consumption of higher ethanol-blended fuels, supporting India's transition towards cleaner and more sustainable energy sources while also benefiting domestic farmers and the sugarcane-based ethanol industry.

With inputs from IANS