In a significant move to reduce some fiscal burden on oil marketing companies, the Union government exempted excise duty on petrol blended with higher levels of ethanol--22 per cent to 30 per cent. The move aims to extend tax support beyond the current E20 blend standard.
According to a report in Reuters, the government said that petrol containing higher ethanol blending will not attract excise duty, and the exemption covers fuel variants such as E22, E25, E27 and E30. This initiative comes as the first major fiscal incentive for ethanol blends above E20.
India imports over 80 per cent of its oil needs, and to check the import bill, the country has been on a journey to expand its ethanol blending programme as part of a broader policy push. The aim is to promote the use of biofuels and reduce dependence on imported crude oil.
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The exemption was announced after the Bureau of Indian Standards notified fuel-quality specifications for ethanol-petrol blends beyond E20.
Will consumers benefit?
Meanwhile, for a consumer, such a move brings an immediate question to the consumer's mind whether the excise duty waiver will translate into a price reduction of such high blended fuel in the retail market.
The move, such as removing excise duty, does lower the tax burden for oil marketing companies on these fuels, but it does not guarantee an immediate relief in price for end consumers, as retail fuel prices depend on several factors. The factors decides fuel prices include global crude oil prices, refining costs, ethanol procurement rates, state taxes and the pricing decisions of oil marketing companies.
No doubt that the exemption will improve the sale of higher ethanol blends and encourage oil companies to push for it.
India’s ethanol blending programme has been moving forward in phases. First, the National Policy on Biofuels, 2018, was amended in 2022 to extend the target of 20 per cent ethanol blending in petrol, the ministry informed Parliament in March 2025.