India Cuts Excise Duty On Petrol With 22%-30% Ethanol To Zero

In a move that may fully pave the way for introduction of a higher ethanol blend in petrol, the Indian government has notified zero excise duty on petrol containing 22 to 30 per cent ethanol. A notification from the Centre specifies that blends of E22, E25, E27 and E30 will not attract any excise duty. This comes a few weeks after India outlined fuel quality standards for blends ranging from E22 to E30.

Also Read: E85 Fuel Priced At Rs 82.12 Per Litre In Delhi; First E85 Station Inaugurated

Road transport minister Nitin Gadkari has, over the last few years, pushed hard for ethanol blending in petrol to be increased, to reduce India's dependence on crude oil imports. With a volatile situation in the Middle East, crude prices have fluctuated wildly in the last few months, and the government is keen on insulating the country from the aftershocks caused by the conflict.

On World Environment Day, petroleum minister Hardeep Singh Puri inaugurated the first fuel station dispensing E85 fuel in Delhi. E85, which is meant strictly for flex-fuel vehicles, contains 85 per cent ethanol, and just 15 per cent petrol. As a result, it is priced Rs 20 lower than E20 petrol. However, there are no vehicles on sale today that can use E85 fuel. Hero MotoCorp will launch two flex-fuel motorcycles in July, but the first flex-fuel car to go on sale is still awaited.

The reduction in excise duty currently has no bearing on what the customer pays at the pump, because India presently does not have petrol-ethanol blends higher than E20 commercially available. The reduction in excise duty is not applicable to E20 fuel. This move is essentially in line with the fuel-quality standards being established earlier, to solidify the framework required to ramp up mass availability of fuels ranging from E22 to E30.