Centre Waives Excise Duty On E22 To E30 Petrol Blends

Petrol blended with more than 20 per cent ethanol will now be exempt from central excise duty, as the government pushes ahead with its ethanol-blending programme and efforts to lower oil imports.

In a notification issued by the Department of Revenue on June 10, the government granted a nil excise duty rate on petrol blended with 22 per cent, 25 per cent, 27 per cent and 30 per cent ethanol. The exemption applies to fuel blends that conform to Bureau of Indian Standards (BIS) specification IS 19850.

The notification inserts four new categories—E22, E25, E27 and E30—into the existing excise framework. Under these standards, E22 consists of 78 per cent petrol and 22 per cent ethanol, E25 contains 75 per cent petrol and 25 per cent ethanol, E27 contains 73 per cent petrol and 27 per cent ethanol, while E30 contains 70 per cent petrol and 30 per cent ethanol.

The exemption applies to fuel blends where applicable duties have already been paid on the petrol component and goods and services tax (GST) has been paid on the ethanol used in the blend. Ethanol supplied to oil marketing companies under the Ethanol Blended Petrol (EBP) Programme currently attracts a concessional GST rate of 5 per cent.

The step comes weeks after BIS notified fuel standards for ethanol-blended petrol containing up to 30 per cent ethanol, creating the regulatory framework needed for the commercial rollout of higher-blend fuels. These fuel variants are not yet widely available in the market.

Beyond E20

India achieved its target of 20 per cent ethanol blending in petrol ahead of schedule and has since been exploring the next phase of the programme. The government has repeatedly indicated its intention to raise blending levels further to reduce crude oil imports, improve energy security and support domestic ethanol production.

The latest excise exemption is seen as a step towards facilitating the eventual adoption of E22, E25, E27 and E30 fuels.

The government has also started promoting higher ethanol-based fuels for compatible vehicles. Earlier this month, India formally launched E85 fuel, which contains 85 per cent ethanol and 15 per cent petrol. The fuel is designed for flex-fuel vehicles that can run on a wider range of ethanol blends than conventional vehicles.

Petroleum and Natural Gas Minister Hardeep Singh Puri had said E85 would be sold at a discount of around Rs 20 per litre compared with E20 petrol. The discount is intended to compensate consumers for ethanol's lower energy content, which means vehicles generally require more fuel to travel the same distance compared with petrol.

Decision Comes Amid Rising Oil Prices

The decision also comes at a time when global crude oil markets remain under pressure due to the ongoing US and Israel war against Iran.

Crude oil prices have risen more than 30 per cent since the conflict began in late February, raising concerns over India's import bill and fuel costs.

International benchmark Brent crude oil futures surged nearly 2 per cent in early trade on June 11 to around $95 per barrel as markets reacted to supply disruptions and fresh escalation in the West Asia conflict.

India, the world's third-largest importer and consumer of crude oil, remains heavily dependent on overseas supplies for meeting its energy needs. Higher ethanol blending allows the country to replace a portion of petrol consumption with domestically produced biofuel, helping reduce exposure to volatile global oil markets.

The government has not yet announced a formal roadmap for nationwide adoption of E25 or E30 petrol, but the latest tax exemption indicates preparations are underway for higher ethanol blends in the years ahead.