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New Delhi
In a major step towards promoting cleaner fuels and reducing dependence on imported crude oil, the Centre has exempted higher ethanol-blended petrol variants from central excise duty, extending tax benefits to fuels containing between 22 and 30% ethanol. The move is expected to strengthen India’s biofuel programme and encourage the adoption of environmentally friendly fuel alternatives.
According to a Finance Ministry notification issued on Wednesday, petrol blends designated as E22, E25, E27 and E30 will now attract a nil rate of excise duty. These fuel grades contain 22%, 25%, 27% and 30% ethanol respectively, with the remaining composition consisting of motor spirit (petrol).
The decision comes as India seeks to expand its ethanol blending programme beyond the current E20 standard, which the country achieved ahead of schedule. Officials said the exemption is intended to incentivise the production and use of higher ethanol blends, helping lower greenhouse gas emissions while cutting the nation’s reliance on imported oil.
The tax waiver follows the recent notification of Bureau of Indian Standards (BIS) specifications for E22, E25, E27 and E30 fuels, clearing the regulatory path for their future rollout. Industry observers view the move as a signal of the government’s long-term commitment to biofuels and energy diversification.
However, the announcement is not expected to immediately lower retail petrol prices, as higher ethanol blends are not yet widely available at fuel stations. Petrol and diesel prices remained unchanged across major cities on Thursday despite the tax relief.
Market reaction was positive, with several sugar companies, key suppliers of ethanol, witnessing gains amid expectations of increased demand for ethanol production. Analysts believe the policy could provide an additional boost to India’s ethanol ecosystem while supporting farmers and domestic biofuel producers.
