The government on Thursday extended central excise duty exemptions to petrol blended with 22%, 25%, 27% and 30% ethanol. The move is aimed at advancing higher ethanol blending levels beyond the existing E20 programme and paves the way for the commercial adoption of petrol blended with up to 30% ethanol.
In a set of notifications issued late Wednesday, the Department of Revenue provided a nil excise duty rate for E22, E25, E27 and E30 fuel blends that conform to BIS standards.
It may be noted that India has already achieved its target of 20% ethanol blending in petrol ahead of schedule.
Under the notifications, E22 fuel will comprise 78% petrol and 22% ethanol, while E25, E27 and E30 fuels will contain 25%, 27% and 30% ethanol, respectively. The exemptions apply where appropriate duties have been paid on motor spirit and applicable GST has been paid on the ethanol used in the blend.
Meanwhile, the industry has welcomed the move. Bharati Balaji, Deputy Director General of the All India Distillers Association (AIDA), called it a landmark step that will accelerate India's energy transition.
“For the distilling industry, this is a powerful demand-side signal, it creates a clear commercial pathway to deploy our surplus ethanol production capacity, which currently stands well above E20 programme requirements. AIDA has long advocated that fiscal incentives must keep pace with blending ambitions, and today's announcement does exactly that,” said Bharati Balaji.
Sivakumar Ramjee, Executive Director – Indirect Tax, Nangia Global, said that the excise duty exemption on E22, E25, E27 and E30 fuels is a strategic move that combines tax policy, energy security and India's long-term climate commitments.
“At one level, the Government is using fiscal incentives to make higher ethanol-blended fuels commercially viable and encourage faster adoption by fuel companies, vehicle manufacturers and consumers. At another level, it is a clear attempt to reduce India's exposure to volatile global crude oil markets at a time when geopolitical conflicts continue to disrupt energy supply chains and influence oil prices,” said Ramjee.