Govt waives excise duty on petrol with higher levels of ethanol
The exemption comes after India launched E85 fuel, a high-ethanol blend for flex-fuel vehicles, priced at a discount of ₹20 per litre compared to regular petrol earlier this month.
- Jun 11, 2026,
- Updated Jun 11, 2026 7:53 AM IST
India, the world's third-largest oil importer and consumer, has abolished excise duty on petrol blended with higher levels of ethanol, according to a government notification issued on Thursday.
Petrol containing 22 to 30 per cent ethanol will now be exempt from excise duty. This means the exemption will be applied on blends known as E22, E25, E27, and E30.
India increased ethanol blending in petrol from 1.53 per cent in 2014 to 20 per cent currently, achieving its target five years ahead of schedule. This programme has saved more than ₹1.84 lakh crore in foreign exchange and reduced crude oil imports by nearly 302 lakh metric tonnes.
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If half of all new two-wheelers and passenger vehicles sold in India switch to flex-fuel technology, annual ethanol demand could rise by more than 312 crore litres, generating roughly ₹12,403 crore in additional income for farmers. This shift could save about ₹15,151 crore in foreign exchange annually and cut carbon dioxide emissions by 66.4 lakh metric tonnes.
The exemption comes after India launched E85 fuel, a high-ethanol blend for flex-fuel vehicles, priced at a discount of ₹20 per litre compared to regular petrol earlier this month.
E85 fuel will initially be available at select petrol pumps and is designed for vehicles with flex-fuel engines. The government plans to expand availability to 500 outlets by December 2026 and about 5,000 outlets by December 2027.
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E85 contains 80-85 per cent ethanol and 14-19 per cent petrol. It can be used only in flex-fuel vehicles capable of running on ethanol blends from E20 to E100. Expanding E85 infrastructure is expected to raise India's overall ethanol blending level to nearly 26 per cent by 2030-31, according to Union Petroleum and Natural Gas Minister Hardeep Singh Puri during the launch.
Puri said India has balanced energy security, affordability, and sustainability while protecting consumers from global energy market volatility. Domestic fuel prices have seen some of the lowest increases globally since February 2026.
India, the world's third-largest oil importer and consumer, has abolished excise duty on petrol blended with higher levels of ethanol, according to a government notification issued on Thursday.
Petrol containing 22 to 30 per cent ethanol will now be exempt from excise duty. This means the exemption will be applied on blends known as E22, E25, E27, and E30.
India increased ethanol blending in petrol from 1.53 per cent in 2014 to 20 per cent currently, achieving its target five years ahead of schedule. This programme has saved more than ₹1.84 lakh crore in foreign exchange and reduced crude oil imports by nearly 302 lakh metric tonnes.
MUST READ | Can flex fuel cut your petrol bill? What the Brazil model shows us
If half of all new two-wheelers and passenger vehicles sold in India switch to flex-fuel technology, annual ethanol demand could rise by more than 312 crore litres, generating roughly ₹12,403 crore in additional income for farmers. This shift could save about ₹15,151 crore in foreign exchange annually and cut carbon dioxide emissions by 66.4 lakh metric tonnes.
The exemption comes after India launched E85 fuel, a high-ethanol blend for flex-fuel vehicles, priced at a discount of ₹20 per litre compared to regular petrol earlier this month.
E85 fuel will initially be available at select petrol pumps and is designed for vehicles with flex-fuel engines. The government plans to expand availability to 500 outlets by December 2026 and about 5,000 outlets by December 2027.
DON'T MISS | India moves closer to higher Ethanol blends as BIS notifies E22-E30 fuel standards
E85 contains 80-85 per cent ethanol and 14-19 per cent petrol. It can be used only in flex-fuel vehicles capable of running on ethanol blends from E20 to E100. Expanding E85 infrastructure is expected to raise India's overall ethanol blending level to nearly 26 per cent by 2030-31, according to Union Petroleum and Natural Gas Minister Hardeep Singh Puri during the launch.
Puri said India has balanced energy security, affordability, and sustainability while protecting consumers from global energy market volatility. Domestic fuel prices have seen some of the lowest increases globally since February 2026.