Centre removes excise duty on petrol with up to 30 pc ethanol blending

NEW DELHI — The government has exempted petrol blended with higher levels of ethanol from excise duty, including fuel variants containing 22 per cent, 25 per cent, 27 per cent and 30 per cent ethanol, according to a notification issued by the Ministry of Finance on Thursday.

As per the notification, excise duty has been set at nil for ethanol-blended motor spirit conforming to Bureau of Indian Standards specifications, covering blends where ethanol content ranges from 22 per cent to 30 per cent by volume.

The exemption has been granted under Section 5A of the Central Excise Act, 1944, it said.

The revised structure includes E22, E25, E27 and E30 petrol, defined as mixtures of motor spirit (petrol) and ethanol in specified proportions, with applicable central, state, Union Territory or integrated taxes on ethanol and duty-paid petrol components.

The amendment follows India’s push to expand ethanol blending in petrol as part of its broader biofuel policy aimed at reducing crude oil imports and promoting domestic renewable fuel usage.

The government has steadily increased ethanol blending levels in petrol in recent years, supported by policy changes under the National Policy on Biofuels and corresponding targets advanced to 2025-26.

In a separate development, the government recently launched E85 fuel for compatible flex-fuel vehicles.

Union Petroleum and Natural Gas Minister Hardeep Singh Puri has highlighted India’s progress in ethanol blending, noting that the share of ethanol in petrol has risen from 1.5 per cent in 2014 to 10 per cent in June 2022, with the 20 per cent blending target achieved ahead of schedule.

"From 2014 until now, we have increased ethanol blending from 1.5 per cent to 10 per cent, which was achieved in November 2022. Our target was to achieve 20 per cent blending by 2030, but we completed it in 2024 itself," Puri said.