The Indian government has waived excise duty on petrol blended with higher levels of ethanol, according to the government notification.
The finance ministry has exempted 22%, 25%, 27%, and 30% ethanol-blended petrol (E22, E25, E27 and E30) from central excise duty, extending tax benefits beyond the existing ethanol-blending regime.
According to the notification, the government removed multiple duties, including basic central excise duty, special additional excise duty, road and infrastructure cess, and Agriculture Infrastructure and Development Cess (AIDC).
The government inserted four new categories under the Central Excise notification:
22% ethanol-blended petrol (E22) – 78% petrol + 22% ethanol
25% ethanol-blended petrol (E25) – 75% petrol + 25% ethanol
27% ethanol-blended petrol (E27) – 73% petrol + 27% ethanol
30% ethanol-blended petrol (E30) – 70% petrol + 30% ethanol
All four categories have been assigned a ‘Nil’ excise duty rate.
The excise duty exemption for higher ethanol-blended petrol comes days after India launched E85 for flex-fuel vehicles on World Environment Day.
E85 is a fuel blend containing 80-85 per cent ethanol and 14-19 per cent petrol. Unlike conventional petrol, it is intended for specially designed flex-fuel vehicles capable of operating on varying ethanol blends, ranging from E20 to E100.
Amid the rising global crude oil prices and burgeoning forex bill, the Indian government is pushing harder to boost the consumption of higher ethanol-blended petrol.
India imports almost 90 per cent of its crude oil requirements, making it vulnerable against the rising oil prices and geopolitical uncertainty.
Since the closure of the Strait of Hormuz, a critical chokepoint to access crude oil and natural gas from gulf countries, India is facing challenges to meet the domestic requirement of oil and gas.
