New Delhi : India has removed excise duty on petrol blended with higher levels of ethanol, giving a tax push to the country’s efforts to increase the use of alternative fuels. On Wednesday, petrol containing 22% to 30% ethanol will be exempt from excise duty.
The decision comes as India, the world’s third-largest importer and consumer of oil, continues to increase the use of ethanol in its fuel mix as part of its broader energy security strategy. Excise duty is a tax imposed by the government on certain goods, including fuels. By exempting petrol with higher ethanol content from this duty, the government is making such fuel blends more economically attractive for producers and suppliers.
India relies heavily on imported crude oil to meet its energy requirements. Increasing the use of ethanol, which is produced domestically from agricultural feedstocks such as sugarcane and grains, helps reduce dependence on imported fossil fuels and lowers the country’s exposure to global oil price swings. The ethanol blending programme has also created an additional market for farmers and supported the government’s broader goal of improving energy security.
For consumers, the immediate impact may be limited. However, the move marks another step in India’s long-term plan to increase the role of domestically produced ethanol in its transport fuel mix. E85 is a blend comprising 85% ethanol and 15% petrol. Since ethanol has around one-third lower energy content than petrol, the price reduction has been introduced to compensate users for the difference.
Energy supplies across the globe are under stress due to the ongoing Middle East war. The conflict, which began back on February 28 after US and Israel launched joint strikes on Iran, has continued to intensify even as peace efforts continue from both sides. With global crude oil prices climbing from around $70 per barrel to above $100, oil marketing companies continue to face significant under-recoveries on fuel sales.
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