In a significant move aimed at strengthening India’s biofuel programme, the Central Government has exempted higher ethanol-blended petrol from central excise duty. The decision comes as India accelerates its efforts to reduce dependence on imported crude oil and promote cleaner, domestically produced fuels.
According to a notification issued by the Ministry of Finance, the excise duty exemption will apply to petrol blends containing between 22% and 30% ethanol. These include E22, E25, E27 and E30 fuel variants, which contain varying proportions of ethanol mixed with conventional motor spirit. Under the revised structure, E22 consists of 22% ethanol and 78% petrol, while E30 contains 30% ethanol and 70% petrol.
The government’s latest decision is part of a broader strategy to expand the use of biofuels across the country. Officials believe that increasing ethanol consumption can help lower India’s massive crude oil import bill, strengthen energy security and support environmental goals by reducing greenhouse gas emissions.
India has emerged as one of the world’s leading ethanol-blending markets in recent years. The country achieved its E20 blending target ahead of schedule and has since begun exploring higher ethanol blends, including E85 fuel designed for flex-fuel vehicles. The government has also introduced policies encouraging automobile manufacturers to develop vehicles capable of running on higher ethanol concentrations.
The announcement comes shortly after the launch of E85 fuel in India. Union Petroleum Minister Hardeep Singh Puri recently said that E85 fuel would be sold at a lower price than existing E20 petrol, making it an attractive option for consumers while supporting the country’s transition towards cleaner mobility solutions.
Experts say the excise duty exemption could improve the commercial viability of higher ethanol blends and encourage fuel retailers to expand their availability. It is also expected to benefit sugar mills and farmers, as ethanol production in India largely depends on sugarcane and agricultural feedstocks. Increased demand for ethanol could create additional income opportunities for the agricultural sector while helping diversify the country’s energy sources.
The government has consistently highlighted ethanol blending as a key pillar of its energy transition strategy. Besides reducing reliance on imported fossil fuels, higher ethanol usage is expected to lower vehicular emissions and contribute to India’s climate commitments. The Centre is also working to expand ethanol dispensing infrastructure, with plans for hundreds of dedicated ethanol fuel stations across the country in the coming years.
While industry stakeholders have largely welcomed the move, experts note that wider adoption of higher ethanol blends will depend on the availability of compatible vehicles and supporting infrastructure. Nevertheless, the excise duty exemption signals the government’s intention to accelerate the shift towards cleaner and more sustainable transportation fuels.
The latest policy decision underscores India’s commitment to expanding the role of biofuels in its energy mix and advancing long-term goals of energy security, environmental sustainability and reduced dependence on imported crude oil.
