New Delhi: As fuel prices continue to climb across the country, the Centre has unveiled a major policy shift aimed at accelerating the adoption of ethanol-blended petrol and easing pressure on consumers and the energy sector. The Finance Ministry has issued a special gazette notification exempting high-ethanol petrol variants from central excise duty.
The exemption applies to fuel blends containing 22 per cent, 25 per cent, 27 per cent and 30 per cent ethanol. The move comes after petrol and diesel prices reportedly rose by around Rs 7.50 per litre over the past month, intensifying concerns over fuel costs and their impact on households and businesses.
The decision covers fuel blends that comply with standards laid down by the Bureau of Indian Standards (BIS). With the government now approving specifications for petrol containing up to 30 per cent ethanol, cleaner and domestically sourced fuel alternatives are expected to gain a stronger foothold in the market.
Under the notification, the exempted fuels will not attract additional excise duties and special excise duties levied under the Central Excise Act, 1944, and provisions of the Finance Act, 2018. However, the Agriculture Infrastructure and Development Cess (AIDC), introduced under the 2021 legislation, will continue to apply.
According to the new standards, fuel blends containing 22 per cent ethanol will consist of 78 per cent motor spirit, while blends containing 30 per cent ethanol will contain 70 per cent motor spirit. These products will enter the market only after applicable central and state taxes are collected.
The latest measure follows the Centre’s push towards flex-fuel mobility, including the recent rollout of E85 fuel for compatible vehicles. Government figures highlighted by Petroleum and Natural Gas Minister Hardeep Singh Puri indicate that India’s ethanol blending programme has recorded significant growth, reinforcing New Delhi’s drive to reduce dependence on conventional fossil fuels and expand alternative energy options.