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.

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.