Excise Duty on Ethanol Portion in Blended Petrol Waived, Sugar Raw
Material for Ethanol Must Suffer GST First
Key
Points
1.
Excise Duty Exemption
o
The government has waived excise duty on higher
ethanol-blended petrol variants: E22, E25, E27, and E30.
2.
Fuel Blend Composition
o
E22: 22% ethanol, 78% petrol.
o
E25: 25% ethanol, 75% petrol.
o
E27: 27% ethanol, 73% petrol.
o
E30: 30% ethanol, 70% petrol.
3.
Promoting Ethanol Usage
o
The exemption is part of India's strategy to
increase ethanol consumption and reduce dependence on imported crude oil.
4.
Expansion of Ethanol Fuel Stations
o
Plans are underway to open 50–100 ethanol fuel
stations in Delhi-NCR, Mumbai, Pune, and Nagpur.
o
The network is expected to expand to 500
stations by the end of 2026.
5.
E85 Fuel to be Discounted
o
Oil marketing companies are preparing to sell E85
fuel (85% ethanol, 15% petrol) at a ₹20 per litre discount
compared to E20 petrol.
6.
Compensation for Lower Energy Content
o
Since ethanol has about one-third lower energy
content than petrol, the discount aims to offset lower fuel efficiency.
7.
E20 Fuel to Remain Widely Available
o
E20 petrol will continue to be sold nationwide as
most vehicles are compatible with up to 20% ethanol blending.
8.
Rising Fuel Prices
o
Petrol and diesel prices have increased by over ₹7.5
per litre since the Middle East conflict began.
9.
Global Oil Market Pressure
o
Crude oil prices have surged from around $70 per
barrel to above $100 per barrel due to geopolitical tensions.
10.
OMCs Facing Under-Recoveries
o
Despite fuel price hikes, oil marketing companies
are reportedly losing around:
§ ₹12
per litre on petrol
§ ₹21
per litre on diesel
Why It
Matters
·
Enhances energy security.
·
Reduces crude oil import dependence.
·
Supports India's ethanol blending targets
and cleaner fuel transition.
·
Provides a boost to the domestic biofuel and
agricultural sectors.
India, world's
third-largest oil importer and consumer, has waived excise duty on blended
petrol. The exemption covers E22, E25, E27 and E30 fuel blends, which contain
varying proportions of motor spirit and ethanol. As per the finance ministry's
notification, these blends consist of 78%, 75%, 73% and 70% motor spirit mixed
with 22%, 25%, 27% and 30% ethanol by volume, respectively.
The move is
part of the government's broader push to expand the use of ethanol, with plans
to open 50-100 ethanol fuel stations in Delhi-NCR, Pune, Mumbai, Nagpur and
scale up the network to 500 by the end of 2026.
The move comes
as petrol and diesel prices in the country have jumped over Rs 7.5 per litre
since the Middle East crisis began, after remaining largely unchanged for
almost 4 years.
Minister Puri
had earlier said that state-run oil marketing companies are preparing to offer
E85 fuel at a discount of Rs 20 per litre compared with E20 petrol. The
discount is aimed at offsetting the lower energy content of the fuel.
E85 is a blend
comprising 85% ethanol and 15% petrol. Since ethanol has around one-third lower
energy content than petrol, the price reduction has been introduced to
compensate users for the difference. Meanwhile, E20 petrol, which contains 20%
ethanol and 80% petrol, will continue to be available at all fuel stations, as
most vehicles on Indian roads are compatible with ethanol blends of up to 20%.
Meanwhile,
energy supplies across the globe are under stress due to the ongoing Middle
East war. The conflict, which began back on February 28 after US and Israel
launched joint strikes on Iran, has continued to intensify even as peace
efforts continue from both sides.
With global
crude oil prices climbing from around $70 per barrel to above $100, oil
marketing companies continue to face significant under-recoveries on fuel
sales. Despite a cumulative increase of over Rs 7.5 per litre in retail prices,
the firms are still losing around Rs 12 per litre on petrol and Rs 21 per litre
on diesel.