Petrol with ethanol blending up to 30% not to attract Central Excise

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The Finance Ministry on Thursday issued a series of notifications exempting petrol with an ethanol blend of 22 per cent to 30 per cent from Central Excise Duty. However, the Oil Ministry noted that these higher blends will not be rolled out until extensive testing and stakeholder consultations are complete.

Petrol with blending up to 10 per cent is so far exempted from Central Excise Duty. to unbranded petrol, Central Excise Duty is Rs 11.90 per litre, while to branded it is Rs 13.10 per litre.

, l l. The fresh notification specified that a zero-percent excise duty applies to 22 per cent ethanol-blended petrol, which is a mix of 78 per cent standard petrol and 22 per cent ethanol, provided all applicable central, state, or union territory taxes have been paid on the base ingredients. The fuel must also meet Bureau of Indian Standards (BIS) specifications. Identical tax exemptions apply to 25 per cent, 27 per cent, and 30 per cent ethanol blends.

However, the Oil Ministry clarified that while this tax relief is a necessary first measure toward introducing higher blends, it does not mean they are launching immediately. Any actual rollout will only happen after extensive testing and stakeholder consultations.

The automobile sector believes that these changes must factor in the consumer interest. In a conversation with businessline recently Shailesh Chandra, MD and CEO of Tata Motors Passenger Vehicles had said: “From a customer standpoint, it is crucial that any possible impact on fuel efficiency from higher ethanol blends is adequately offset. The right and efficiently way to address this would be through appropriate pricing of ethanol-blended fuels, ensuring that the overall cost of ownership remains attractive to consumers. We have seen similar market dynamics in the case of CNG, where fuel pricing has played a key role in driving adoption.”

Sivakumar Ramjee, Executive Director- Indirect Tax at Nangia Global said, “Tax incentives alone will not ensure success. The prolonged outcome will depend on the availability of sustainable feedstock, investment in fuel infrastructure, compatibility of vehicles with higher ethanol blends and consumer confidence in performance and fuel economy.”

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