No Excise Duty On E22, E25, E27, E30 Fuels: What Does It Mean To You? Ethanol Fuel Vs Regular Petrol

The government is pushing for ethanol-blended petrol on fuel swings amidst the global energy crisis, stemming from the West Asian war. In major good news, the government has removed excise duty on petrol that is blended with higher ethanol. The Strait of Hormuz remains a focal point of the US-Iran war and its shutdown has led to a global oil and gas supply crunch. This forced oil marketing companies to make a series of hikes in regular petrol and diesel prices, hitting the common man's pocket significantly.

Excise Duty Exemption On Petrol Blended With Higher Ethanol:

As per the latest reports, the government has removed excise duty on petrol blended with higher ethanol. For instance, petrol containing 22% to 30% of ethanol will be exempted from excise duty. These include ethanol fuel variants like E22, E25, E27 and E30.

E22 Fuel Variant: This comprises of 22% ethanol and 78% of petrol.

E25 Fuel Variant: This includes 25% ethanol and 75% of petrol.

E27 Fuel Variant: This fuel is a mixture of 27% ethanol and 73% petrol.

E30 Fuel Variant: This fuel includes 30% ethanol and 70% of petrol.

These four fuel ethanol variants have recently received the Bureau of Indian Standards (BIS) hallmarking of IS 19850.

This major decision comes after India achieved its E20 ethanol blending target ahead of 2025-26, and during series of hikes in regular petrol and diesel prices.

India's Ethanol Fuel Push!

Data cited by Infomerics Valuation & Ratings revealed that India has achieved the E20 ethanol blending target ahead of the revised 2025-26 timeline, marking a major milestone in the country's clean energy and energy security roadmap.

Also, Ethanol procurement by India increased more than tenfold from 67.4 crore litres in ESY 2014-15 to 707.4 crore litres in ESY 2023-24, driving blending levels from 2.33% to 14.6%, while blending touched 18.36% in ESY 2024-25.

"India's ethanol ecosystem is increasingly diversifying beyond sugarcane, with grain-based ethanol, especially maize, emerging as a major contributor to supply, reducing dependence on traditional molasses-based production," said Dr. Manoranjan Sharma, Chief Economist, Infomerics Valuation and Ratings last month in a note to GoodReturns.

He further added that India may soon face surplus ethanol production capacity, with installed capacity expected to reach nearly 24 billion litres against current E20 demand of around 11-12 billion litres annually, raising concerns over underutilisation and financial viability of distilleries.

Highlighting further, Dr Sharma believes the government has already notified fuel standards for higher ethanol blends such as E22, E25, E27, and E30, while discussions around E85 and E100 indicate India's long-term ambition for greater energy self-reliance.

Difference Between Ethanol Fuel Vs Regular Petrol:

Ethanol is a renewable biofuel made from plant materials, while petrol is derived from fossil fuels. Ethanol has a lower energy content than petrol but produces fewer emissions, making it a cleaner option, as per Bajaj Auto Credit explainer.

Can You Use Ethanol Fuel In Your Vehicle?

As per the explainer, it is advisable to check your vehicle's manual, fuel-cap stamps, or consult the manufacturer's website to confirm E20, E22, E25, E27 and E30 compatibility. Older vehicles may need modifications like ethanol-resistant fuel lines.