India has exempted excise duty on the blending of petrol with more than 20% ethanol, extending a previous waiver. This move aims to reduce dependence on imported crude oil, though higher blends may require vehicle modifications.
This policy shift aims to enhance India's energy security by reducing its dependence on imported crude oil, while also promoting the domestic production and use of biofuels.
India has exempted excise duty on the process of blending petrol with more than 20% ethanol, extending a previous waiver. This move is part of the government's strategy to reduce reliance on imported crude oil, especially amid global energy security concerns. The exemption applies solely to the blending activity, which is considered a manufacturing process, while petrol and ethanol themselves remain taxed separately.
While the exemption is seen as a prerequisite for introducing higher ethanol blends, the Ministry of Petroleum and Natural Gas stated that extensive testing and consultation are required before any rollout. The current standard for petrol sold in India is E20, containing 20% ethanol, and most vehicles manufactured in recent years are compatible only with this blend. Fuels with higher ethanol content can potentially damage engines not designed for them.
To further promote ethanol use, the government is also supporting flex-fuel vehicles capable of running on much higher ethanol blends. Recently, state-run oil companies introduced E85 fuel, an 85% ethanol and 15% petrol mixture, at select retail stations. This push is further supported by a significant expansion in India's ethanol production capacity, which now nearly doubles current consumption levels.
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