Centre Waives Excise Duty on High Ethanol-Blended Petrol to Accelerate Biofuel Adoption

The Indian government has exempted petrol blended with higher concentrations of ethanol from central excise duty, covering blending ratios of 22%, 25%, 27% and 30%, as per an official gazette notification issued late on Wednesday.

The fiscal measure is being seen as a focused effort to fast-track the uptake of biofuels in the country's domestic transportation sector. The Bureau of Indian Standards (BIS) had earlier notified mandatory fuel standards for these high-blend variants on 19 May. However, none of these higher-concentration fuels is currently available at commercial fuel pumps across the country.

The move towards higher blending targets comes after India successfully achieved the 20% ethanol blending milestone under the nationwide Ethanol Blended Petrol (EBP) Programme.

In a statement issued following the standardisation rollout, the BIS said the new fuel benchmarks are designed to promote cleaner automotive transportation, strengthen national energy security and sustainability, reduce the country's dependence on costly crude oil imports, and generate a strong demand boost for the domestic agriculture sector.

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The gazette notification follows the recent launch of the high-concentration E85 petrol variant, comprising 85% ethanol blended with 15% conventional gasoline. The fuel was formally introduced on 5 June to coincide with World Environment Day.

Importantly, E85 has been priced approximately ₹20 per litre lower than the widely available E20 variant. The pricing strategy is aimed at giving consumers a compelling financial incentive, in addition to the environmental benefits associated with shifting to cleaner energy alternatives.

With the exemption in place, the government has signalled its intent to push beyond the E20 benchmark and build momentum for progressively higher ethanol blending.