In a major development, the central government has exempted petrol blended with a higher concentration of ethanol from the entire excise duty leviable on it, according to notifications issued by the Ministry of Finance's Department of Revenue on Thursday.
The notifications set a nil rate of central excise duty, special additional excise duty, Road and Infrastructure Cess, and Agriculture Infrastructure and Development Cess on petrol blended with 22%, 25%, 27%, and 30% ethanol, respectively.
The move amends existing central excise notifications dating back to 2002 and 2017, and extends zero-duty treatment that was previously available only to lower-blend fuels.
The exemption is designed to improve the economics of high-blend ethanol fuel for oil marketing companies, advancing India's stated target of 30% ethanol blending in petrol.
Sugar Companies In Focus
This development is likely to bring sugar companies such as Balrampur Chini Mills, Shree Renuka Sugars, Dhampur Sugar Mills and Triveni Engineering into focus.
All these companies have invested heavily in distillery capacity and stand to benefit from ethanol offtake demand, especially now that oil marketing companies have a better incentive to push higher-blend fuels.
India has been targeting 30% ethanol blending in petrol as part of its energy transition roadmap, though actual blending levels have remained well below that threshold due to supply and pricing constraints.
Public perception of E20 fuels has also taken a hit. A survey by community platform LocalCircles last year found that there is much apprehension over fuel efficiency, vehicle compatibility and higher maintenance cost, as far as adoption of E20 fuels are concerned.
ALSO READ: Ethanol Push: Oil Minister Puri Expects E85 To Beat E20 In Adoption On Cheaper Price Point
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