Center exempts E22, E25, E27 and E30 fuels from excise tax after approval of higher standards for ethanol blends | Today’s news
The government has extended exemptions from central excise duty to petrol blended with 22%, 25%, 27% and 30% ethanol, a significant policy step towards promoting higher levels of ethanol blending beyond the existing E20 programme.
The move assumes significance as it follows the government’s approval of standards for ethanol blended petrol containing up to 30% ethanol, paving the way for commercial adoption of higher blend fuels.
In a set of notifications issued late on Wednesday, the revenue department amended several central excise notifications to grant nil rates of excise duty and related exemptions to ethanol-based petrol containing 22%, 25%, 27% and 30% ethanol by volume, provided the blends conform to the Bureau of Indian Standards (BIS) IS 19850 specification.
The notifications provide zero rate of excise duty on E22, E25, E27 and E30 fuel blends that conform to BIS standards.
For E20
The move comes as India has already met its 20% ethanol blending target ahead of schedule and is exploring higher blending levels to reduce oil imports, lower carbon emissions and increase demand for domestically produced biofuels.
According to the announcement, E22 fuel will contain 78% gasoline and 22% ethanol, while E25, E27 and E30 fuels will contain 25%, 27% and 30% ethanol, respectively. The exemptions apply where the relevant duty has been paid on the motor petrol and the relevant GST has been paid on the ethanol used in the blend.
The changes were made in Notification No. 11/2017-Central Excise and Notification No. 28/2002-Central Excise, with separate notifications also exempting these higher blends from additional excise and road and infrastructure taxes.
Technical basics
India’s ethanol blending program has expanded rapidly in recent years, with ethanol purchases by oil marketing companies surging due to increased production at sugarcane and grain-based distilleries.
The government has repeatedly indicated that it intends to further increase blending levels after the E20 milestone is reached, although a formal plan to adopt E25 or E30 has yet to be announced.
Mint had earlier reported on May 19 that India had laid the technical groundwork for gasoline blended with up to 30% ethanol, signaling the government’s intention to move beyond the ongoing E20 rollout as geopolitical tensions and fluctuating oil prices sharpen the country’s energy security concerns.
In a notification dated May 18, the Bureau of Indian Standards (BIS) announced standards for fuel blends E22, E25, E27 and E30, which relate to petrol blended with 22%, 25%, 27% and 30% ethanol respectively.
Energy security
India is currently rolling out nationwide adoption of E20 fuel, while industry bodies and biofuel producers are increasingly pushing for a shift to E22 blends and above, citing the excess availability of ethanol and the need to reduce dependence on oil imports.
The move comes as the country grapples with oil supply cuts and volatile prices caused by the war in West Asia, notably the closure of the Strait of Hormuz waterway through which 20% of the world’s oil reserves pass.
Such a move would also likely increase utilization of ethanol production capacity from the current 50%.
