India has exempted several ethanol-blended petrol variants from excise duty as part of its ongoing effort to promote cleaner and more sustainable fuels. The move applies to E22, E25, E27, and E30 fuel blends, which contain different proportions of petrol and ethanol.
According to a notification issued by the Finance Ministry, the exempted blends consist of:
E22: 78% petrol and 22% ethanol
E25: 75% petrol and 25% ethanol
E27: 73% petrol and 27% ethanol
E30: 70% petrol and 30% ethanol
The decision aligns with the government’s broader strategy to increase ethanol adoption across the country. Plans are underway to establish 50–100 dedicated ethanol fuel stations in major cities, including Delhi-NCR, Pune, Mumbai, and Nagpur, with a target of expanding the network to 500 stations by the end of 2026.
Fuel Price Pressures and Ethanol Push
The excise duty exemption comes at a time when fuel prices have risen sharply. Petrol and diesel prices have increased by more than ₹7.5 per litre since the onset of the Middle East conflict, following nearly four years of relative stability.
Earlier, Petroleum Minister Hardeep Singh Puri stated that state-run oil marketing companies are preparing to introduce E85 fuel at a discount of ₹20 per litre compared with E20 petrol. E85 contains 85% ethanol and 15% petrol.
The proposed discount is intended to offset ethanol’s lower energy content. Since ethanol delivers roughly one-third less energy than conventional petrol, the reduced price is designed to ensure cost competitiveness for consumers.
Meanwhile, E20 petrol—a blend of 20% ethanol and 80% petrol—will continue to be available nationwide, as most vehicles currently operating in India are compatible with ethanol blends of up to 20%.
Global Oil Market Challenges
The government’s move also comes amid growing pressure on global energy markets due to the ongoing conflict in the Middle East. The war, which began after joint US-Israeli strikes on Iran on February 28, has continued to escalate despite diplomatic efforts.
As a result, global crude oil prices have surged from around $70 per barrel to over $100 per barrel. Although retail fuel prices in India have risen by more than ₹7.5 per litre, oil marketing companies continue to face significant losses.
Industry estimates suggest that despite the recent price hikes, oil retailers are still incurring under-recoveries of approximately ₹12 per litre on petrol and ₹21 per litre on diesel, highlighting the continued strain on the sector.
