Ethanol Excise Duty: The government has issued a new notification to promote ethanol petrol in the country. India has given tax exemption on such blends of petrol, which most motorists cannot buy today. Through the recently issued Central Excise Notification, the government has exempted petrol containing 22%, 25%, 27% and 30% ethanol from excise duty.

The latest notification does not mean that E22, E22 or E30 petrol will be available at fuel stations immediately. Currently, petrol containing more than 20% ethanol is not being retailed on a large scale in India. Instead, the move creates a tax framework for higher ethanol blends in the future, as the country prepares for the next phase of its plan to reduce dependence on imported crude.

Why is India preparing for more ethanol?

This important step of the government is to support the domestic sugar and grain industries through ethanol. It is being seen as a way to improve long-term energy security. The process of moving towards more blending has already begun at the regulatory level. These levels include fuel composition, blending methods, limits of impurities, testing methods, safety requirements and quality standards for these fuels. Oil marketing companies are also upgrading storage, blending and distribution systems to support more ethanol blends and specialty fuels for flex-fuel vehicles.

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Who will use E30 petrol?

The biggest question is whether existing vehicles can run on this fuel. Most of the vehicles currently available in India were built on low ethanol fuel (like E5 or E10). Industry estimates show that approximately 80% of vehicles sold in the last 15 years were actually designed for low ethanol fuel.

Although automobile manufacturers have produced E20-compatible vehicles in recent years, extreme blends like E30 may require further changes to engine design, fuel system and material compatibility. This is why oil companies, fuel suppliers and companies making future ethanol-compatible vehicles are likely to benefit from the new tax exemption rather than common vehicle owners.

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