India extends excise duty exemption on E22, E25, E27 and E30 ethanol-blended petrol

The Union Government on late Wednesday extended excise duty exemptions on ethanol-blended petrol, to push the consumption of biofuels in the country. Excise duty on Petrol with 22 per cent, 25 per cent, 27 per cent, and 30 per cent, which conforms to the BIS standards, will be effectively nil under the statutory excise act. The announcement was made through the official notification of the Department of Revenue in the Gazette of India. The decision is aimed at the nationwide mandate of E20 petrol to transition the fuel ecosystem toward the target of 30 per cent blending by 2030.

The Gazette notification provide the legal and technical composition of what E22, “22% ethanol blended petrol that is a blend, – (a) consisting, by volume, of 78% motor spirit, (commonly known as petrol), on which the appropriate duties of excise have been paid and of 22% ethanol on which the appropriate Central tax, State tax, Union territory tax or Integrated tax, as the case may be, have been paid; and (b) conforming to the Bureau of Indian Standards specification IS 19850.” A similar composition framework has been set up for E25, E27 and E30. The Oil Marketing Companies have to pay excise duties on raw materials to secure exemptions in the final product. This comes as on May 15, the Bureau of Indian Standards (BIS) announced IS 19850:2026 standard in the Gazette of India, specifying strict use of Anhydrous Ethanol, permissible impurities, octane ratings and sulphur limits.

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Controversies around the push for ethanol

The push for biofuels started in 2018, to reduce the dependency on crude oil imports and for less emissions. But some vehicle owners have raised concerns about ethanol compatibility and increased maintenance costs. "The biggest thing is that pollution will be less because this is a green fuel. The money that goes abroad for fuel imports will remain in the country and benefit farmers, rural youth, labourers, tribal communities, and the agriculture sector," said Union Road Transport and Highways Minister Nitin Gadkari, whose family reportedly has stakes in entities engaged in ethanol production.