The government on Thursday extended central excise duty exemptions to petrol blended with 22%, 25%, 27% and 30% ethanol, following the notification of standards for higher ethanol blends and months after India achieved its 20% ethanol blending target.
In a notification issued by the department of revenue, E22, E25, E27 and E30 fuels conforming to Bureau of Indian Standards (BIS) specification IS 19850:2025 have been granted nil central excise duty.
According to the notification, “22% ethanol blended petrol consisting, by volume, of 78% motor spirit (commonly known as petrol), on which the appropriate duties of excise have been paid and of 22% ethanol on which the appropriate Central tax, State tax, Union territory tax or Integrated tax, have been paid” shall attract nil duty. Similar exemptions have been notified for E25, E27 and E30 blends.
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The notifications also exempt these higher ethanol blends from additional excise duty and road and infrastructure cess.
The move comes weeks after the Bureau of Indian Standards notified specifications for petrol blended with 22%, 25%, 27% and 30% ethanol, paving the way for future use of higher-blend fuels.
Crucial Legal Prerequisite
However, the petroleum ministry clarified that the notifications should not be interpreted as an immediate rollout of higher ethanol blends.
“With higher BIS standards available, excise duty waiver has been extended to E22, E25, E27 and E30. This is a preliminary prerequisite for eventually introducing higher blends but doesn’t convey anything about rollout of higher blends as of now as that will only be done after extensive testing and consultation,” the ministry said.
The clarification comes amid discussions within the industry on the implications of moving beyond E20. While higher ethanol blends could further reduce crude oil imports and support domestic ethanol producers, automobile industry executives have pointed out that widespread adoption would require extensive testing of vehicles and fuel systems. Some experts have also flagged concerns that higher ethanol content could reduce fuel efficiency and raise maintenance costs for older vehicles not designed for such blends.
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According to a written reply in Lok Sabha by Minister of State for Petroleum Suresh Gopi, public sector oil marketing companies achieved the 20% ethanol blending target in December 2025. Ethanol supplies to oil marketing companies increased from 38 crore litres in Ethanol Supply Year (ESY) 2013-14 to over 1,000 crore litres in ESY 2024-25.
Forex Savings Triggers
Government data shows that the ethanol blending programme since ESY 2014-15 has helped save Rs 1.84 lakh crore in foreign exchange, resulted in 30.2 million metric tonnes of crude oil substitution, reduced 90.9 million metric tonnes of CO₂ emissions, and generated ₹1.58 lakh crore in earnings for farmers.
Industry executives said a transition beyond E20 may ultimately require greater adoption of flex-fuel vehicles capable of operating on varying ethanol blends, along with investments in fuel distribution infrastructure.
“Exempting E22, E25, E27, and E30 from excise duty directly answers what the industry has been building toward. We have already proven that supply is not the constraint. The industry recently offered 17 billion litres against an 11 billion litre tender,” said Samir Somaiya, chairman and managing director, Godavari Biorefineries.
Calling the decision a landmark step, Bharati Balaji, deputy director general of the All India Distillers Association, said the exemption “creates a clear commercial pathway to deploy our surplus ethanol production capacity, which currently stands well above E20 programme requirements.”
“It strengthens farmer incomes, reduces our crude import bill, and reinforces India’s energy security at a time when global fuel markets remain deeply volatile,” Balaji added.
TOPICSethanolThis article was first uploaded on June eleven, twenty twenty-six, at ten minutes past ten in the night. © The Indian Express (P) Ltd