Introduction of duty differential between ethanol blended petrol and unblended petrol in the budget 2022-23 will help reduce India’s dependence on imported fuels, says industry and analysts.
In order to increase blending to meet the target of 20% ethanol blending with petrol by 2025, the Union Budget has introduced an additional differential excise duty of Rs. 2 per litre on unblended fuel effective October 1, 2022.
“In the light of increasing crude oil prices globally and the resultant petrol prices in the country, such additional duty and resultant hike in prices to end users would encourage higher usage of blended fuel and accelerate the movement towards achieving the targets provided the necessary distribution infrastructure is created timely. Many large sugar mills are in midst of capacity expansion for distilleries coupled with investments being proposed by grain-based distilleries and through proposed 12 biorefineries would facilitate the supplies to meet the long term targets,” said Sabyasachi Majumdar, Senior Vice President & Group Head – Corporate Ratings, ICRA. Limited.
Tarun Sawhney, Vice Chairman and Managing Director, Triveni Engineering and Industries said, “The Government’s move to levy excise duty of Rs 2/litre on unblended fuel will motivate Oil Manufacturing Companies to shift their focus towards ethanol-blended petrol. This will ultimately reduce India’s dependency on imported fuels, fast-tracking the government’s aim to achieve an Ethanol blending target of 20% by 2025.”
The move will also help the sugarcane farmers. ” It will help promote the sugarcane farmers to divert their produce towards ethanol production, assisting the farmers in a big way, by enhancing their income, infrastructure development leading to rural development and job creation,” said Sawhney.