Government extends excise duty exemption to petrol blended with up to 30% ethanol

The Indian government has expanded central excise duty exemptions on ethanol-blended petrol, extending the benefit to fuel containing 22%, 25%, 27% and 30% ethanol, according to an official notification issued on June 10.

Under the revised framework, petrol blends that meet Bureau of Indian Standards (BIS) specifications will attract a zero excise duty rate, a move aimed at supporting the country’s ethanol-blending programme and reducing dependence on imported fossil fuels.

The decision comes months after the Centre cut excise duties on petrol and diesel by ₹10 per litre each in late March to cushion consumers from the impact of surging global oil prices. The reduction also helped offset losses faced by oil marketing companies without lowering retail fuel prices.

At the same time, the government imposed export duties of ₹21.5 per litre on diesel and ₹29.5 per litre on aviation turbine fuel (ATF) to ensure adequate domestic availability amid disruptions to global energy supplies caused by the escalating West Asia conflict.

Announcing the March duty cuts, Finance Minister Nirmala Sitharaman said the move was intended to protect consumers from rising fuel costs and volatility in international energy markets.

The conflict in West Asia, triggered by joint US-Israeli strikes on Iran in February, has severely affected global oil trade. The Strait of Hormuz, through which roughly one-fifth of the world’s oil and gas supplies transit, has faced major disruptions due to ongoing military tensions.

As crude oil prices surged, Indian fuel retailers implemented four rounds of price increases beginning May 15. In the latest revision on May 25, state-run oil companies raised diesel prices by ₹2.71 per litre and petrol prices by ₹2.61 per litre, taking the cumulative increase since mid-May to about ₹7.5 per litre.