New Delhi: The All India Distillers' Association (AIDA) on Thursday welcomed the government's move to exempt petrol containing higher proportions of ethanol from excise duty, describing it as a transformative step that creates a commercial pathway beyond the country's existing E20 blending programme.
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The exemption, issued through gazette notifications dated June 10, covers the E22, E25, E27 and E30 blends and places them on the same fiscal footing as E20 fuel, the association said.
"The exemption of E22-E30 blends from excise duty is a landmark decision that signals India's readiness to move beyond E20 and embrace the next phase of its biofuel journey," AIDA President S Vijendra Singh said in a statement.
"It sends a strong message that the government remains committed to energy self-reliance, farmer prosperity and the growth of indigenous biofuels."
According to the notification, excise duty has been brought down to nil on petrol blended with 22 percent, 25 percent, 27 percent and 30 percent ethanol, widening an exemption that was so far limited to blends of up to 20 percent ethanol.
Officials, however, cautioned against reading the notification as a signal that higher ethanol blends are about to reach retail pumps. The exemption is a regulatory necessity, they said, because doping ethanol into petrol at fuel depots qualifies as a manufacturing activity that would otherwise attract excise duty, a liability the Finance Ministry had exempted only up to E20 until now.
Extending the waiver to E22, E25, E27 and E30 is a preliminary step that would smoothen any future introduction of higher ethanol-content fuels, the officials said, adding that an actual rollout would follow only after extensive testing and consultations.
The measure is intended to encourage the uptake of ethanol-blended petrol as India works to cut its dependence on imported crude oil and raise the share of biofuels in its energy basket.
AIDA said it had consistently sought the fiscal change through representations to the ministries of finance and petroleum, contending that dismantling duty-related barriers on higher blends was essential to building a viable market beyond E20.
The association said the decision would draw fresh investment into ethanol capacity, bolster demand for sugarcane and maize as feedstocks and trim the country's imported crude bill. India's ethanol blending levels have risen from 1.53 percent in 2014 to nearly 20 percent at present, delivering foreign exchange savings and additional income for farmers over the decade.
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The exemption would also lay the groundwork for the eventual introduction of flex-fuel vehicles, E85 fuel and other advanced biofuel applications, marking a gradual transition from a supply-driven to a demand-driven ethanol economy, AIDA said.
The notification comes with fuel prices under strain. The Centre had in March cut excise duties on petrol and diesel by Rs 10 per litre — forgoing over Rs 1 lakh crore in annual revenue — to cushion consumers from the surge in global crude prices triggered by tensions in West Asia, even as retail petrol and diesel prices climbed by nearly Rs 7.50 a litre in the second half of May.
