The government has extended central excise duty exemptions to petrol blended with 22%, 25%, 27% and 30% ethanol, marking a significant policy step towards supporting higher ethanol blending levels beyond the existing E20 programme.
The move assumes significance as it follows the government's approval of standards for ethanol-blended petrol containing up to 30% ethanol, paving the way for the commercial adoption of higher-blend fuels.
In a set of notifications issued late Wednesday, the Department of Revenue amended multiple central excise notifications to grant nil excise duty rates and related exemptions for ethanol-blended petrol containing 22%, 25%, 27% and 30% ethanol by volume, provided the blends conform to Bureau of Indian Standards (BIS) specification IS 19850.
The notifications provide a nil excise duty rate for E22, E25, E27 and E30 fuel blends that conform to BIS standards.
Beyond E20
The move comes as India has already achieved its target of 20% ethanol blending in petrol ahead of schedule and is exploring higher blending levels to reduce crude oil imports, cut carbon emissions and boost demand for domestically produced biofuels.
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 ethanol used in the blend.
The amendments have been made to Notification No. 11/2017-Central Excise and Notification No. 28/2002-Central Excise, while separate notifications also exempt these higher blends from additional excise duties and road and infrastructure cess.
Technical groundwork
India's ethanol blending programme has expanded rapidly in recent years, with ethanol procurement by oil marketing companies rising sharply on the back of increased production from sugarcane-based and grain-based distilleries.
The government has repeatedly indicated that it intends to raise blending levels further after achieving the E20 milestone, although a formal roadmap for E25 or E30 adoption is yet to be announced.
Earlier, News agency reported on 19 May that India had laid the technical groundwork for petrol blended with up to 30% ethanol, signalling the government's intent to move beyond the ongoing E20 rollout as geopolitical tensions and volatile crude prices sharpen the country's energy security concerns.
In a notification dated 18 May, the Bureau of Indian Standards (BIS) notified norms for E22, E25, E27 and E30 fuel blends, which refer to petrol blended with 22%, 25%, 27% and 30% ethanol, respectively.
Energy security
India is currently implementing E20 fuel adoption nationwide, while industry bodies and biofuel manufacturers have increasingly advocated movement towards E22 and higher blends, citing surplus ethanol availability and the need to reduce oil import dependence.
The move comes as the country grapples with a crude supply squeeze and volatile prices triggered by the West Asia war, especially the closure of the Strait of Hormuz waterway, through which 20% of the world's oil supply passes.
Such a move would also likely raise ethanol production capacity utilization from the current 50%.