Govt Waives Excise Duty on Ultra-High Ethanol Blends as India Accelerates Biofuel Push Beyond E20

Govt Waives Excise Duty on Ultra-High Ethanol Blends as India Accelerates Biofuel Push Beyond E20​

India has significantly advanced its biofuels agenda by exempting petrol variants containing high levels of ethanol from excise duty, according to a government notification issued on Thursday. This fiscal support extends beyond the existing E20 standard, providing crucial backing for future fuel chemistries.

The exemption covers specific blends referred to as E22, E25, E27, and E30. These varieties contain between 22 percent and 30 percent ethanol blended with petrol, signaling a major commitment to maximizing biofuel integration within the nation's fuel supply chain.

Technical Framework for High-Ethanol Blends Established​

This recent tax relief follows a formal technical establishment of these higher blends by the Bureau of Indian Standards (BIS). The BIS notification, published in the Gazette of India, laid down detailed standards for E22, E25, E27 and E30 under IS 19850:2026.

These new standards define parameters including ethanol content, octane levels, sulphur content, vapour pressure, and essential safety norms. The move created a necessary technical framework before the subsequent excise duty exemption took effect. Industry reports indicated that these specific standards came into force from May 15, 2026.

Ethanol Blending Program Reaches New Heights​

The state of ethanol blending in India reflects an ambitious, multi-phase national strategy. As part of a broader policy to reduce dependence on imported crude oil and increase biofuel usage, the government has continuously escalated its commitments.

The National Policy on Biofuels, 2018, was amended in 2022 to accelerate the goal for petrol blending from 20 percent by 2030 to Ethanol Supply Year (ESY) 2025-26. The Petroleum Ministry previously reported that public sector oil marketing companies achieved 10 percent blending in June 2022.

Ethanol blending has seen steady growth, rising from 14.60 percent in ESY 2023-24 to 17.98 percent in ESY 2024-25, as recorded up to February 28, 2025. This continuous upward trajectory underscores the national focus on decarbonization.

Addressing Cost Concerns and Market Stability​

The move comes after regulatory bodies addressed concerns over the economic viability of high-ethanol fuels. In August 2025, the Petroleum Ministry noted that the weighted average procurement cost of ethanol had surpassed the cost of refined petrol.

As of July 31, 2025, the ministry reported that the average procurement cost of ethanol for ESY 2024-25 stood at Rs 71.32 per litre, inclusive of transportation and GST. The current excise duty exemption is a direct measure to stabilize the market amid these input cost pressures.

New Market Dynamics with E85 Launch​

The tax relaxation arrives shortly after India's launch of E85 fuel, which is petrol blended with 85 percent ethanol, specifically targeting flex-fuel vehicles. This high-octane variant represents an aggressive step toward advanced biofuel usage.

Petroleum Minister Hardeep Singh Puri indicated that state-run oil marketing companies will sell the specialized E85 fuel at approximately Rs 20 per litre below the price of standard E20 fuel. The overall regulatory environment thus supports a rapid market transition towards advanced bio-fuels.