Govt cuts excise duty on ethanol-blended petrol
There is no change in the central excise duty rate on petrol for domestic consumption
In a move to increase the country's adoption of biofuels, the government has exempted the central excise duty on petrol blended with a higher percentage of ethanol (22 percent to 30 percent), as per government sources.
In a notification number 26/2026-Central Excise to 29/2026-Central Excise dated 10 June, 2026, the government has exempt Ethanol Blended Petrol (EBP) blends like E22, E25, E27 and E30 containing 22 percent, 25 percent, 27 percent and 30 percent ethanol respectively, from the applicable central excise duties.
However, this is subject to the condition that appropriate central excise duties have already been paid on petrol and appropriate GST has been paid on the ethanol used for blending.
The objective is only to remove the deeming fiction under the central excise law that could otherwise result in levy of excise duty again upon the activity of blending of ethanol with petrol, thereby avoiding any incidence of double taxation.
The exemption has been provided on the same lines as is already existing for EBP blends such as E5, E10, E20 etc. However, there is no change in the central excise duty rate on petrol for domestic consumption.
Furthermore, fuel blends that meet the specified composition parameters and adhere to Bureau of Indian Standards (BIS) specification IS 19850 are eligible for the exemption.
According to the notification, E22 fuel must have 78 percent motor spirit (petrol) and 22 percent ethanol by volume, whilst E30 fuel must have 70 percent petrol and 30 percent ethanol. For E25 and E27 blends, comparable composition standards have been established.
The move is a part of the government's larger effort to increase the use of ethanol, with plans to open 50–100 ethanol fuel stations in Delhi-NCR, Pune, Mumbai, and Nagpur and grow the network to 500 by the end of 2026.
Also, it has come at a time when the country's fuel and diesel prices, which had been essentially stable for nearly four years, have surged by Rs 7.5 per litre since the start of the West Asia crisis.
Akshay Modi, Managing Director, Modi Biotech Pvt Ltd, said boosting the amount of ethanol blends is not only good for the environment, but it is also a necessary strategy to reduce the country's dependence on crude oil.
He said the successful roll-out of E20 in India shows that with the right mix of government policy, industry investment, and agricultural cooperation, energy transition processes can work well. The next step is to build trust among consumers and the automotive ecosystem to make the transition smoother.
For E30, production capacity and feedstock availability are already in place. The gap is in the automobile sector, which must enable higher blends by testing and certifying the existing vehicle fleet for compatible blends (E22–E30 depending on age/materials).
"The transition to E22 to E30 should be done in a calculated manner with assessment of vehicle compatibility, and ongoing policy support. If these factors stay in place, India is in a strong position to move beyond E20 and speed up its journey toward a more secure, self-sufficient, and varied energy future," Modi said.
