India expands tax exemption for ethanol-blended gasoline to reduce import reliance

The Middle East conflict has not completely subsided, and global energy supply cannot fully recover. To reduce its reliance on imported crude oil, the Indian government is encouraging the public to use gasoline blended with ethanol. It has now expanded the scope of its excise duty exemption to include gasoline with 22% to 30% ethanol content.

Following conflicts between the United States, Israel, and Iran in February, peace talks are underway. However, the Strait of Hormuz, which was blocked due to the Middle East war, has not been fully unblocked. This waterway is a crucial route for 20% of global oil and gas transport.

India relies on imports for over 80% of its oil and natural gas, and has been severely impacted by the blockade of the Strait of Hormuz. Domestic oil prices have risen for four consecutive times since mid-May, as policies including subsidies could no longer compensate for the huge losses incurred by related companies.

The Hindustan Times reported today that the Indian government has expanded the scope of its excise duty exemption to include gasoline containing 22%, 25%, 27%, and 30% ethanol.

At the end of March, the Indian government had already reduced the excise duty on gasoline and diesel by 10 rupees per liter to protect consumers from rising international oil prices. It has now issued a further notification stating that gasoline containing 22%, 25%, 27%, and 30% ethanol, provided it meets the Bureau of Indian Standards (BIS) IS19850 standard, will be exempt from excise duty. The prerequisite is that the ethanol blended into the gasoline must have already paid excise duty and other relevant taxes.

India is the world's third-largest oil importer and consumer. For the past decade, the Indian government has continuously encouraged an increase in the ethanol content in gasoline as part of its energy security strategy, to reduce expenditure on imported oil, and to promote clean energy.

India Today reported today that India's energy demand is highly dependent on imported crude oil. Using gasoline blended with ethanol helps reduce reliance on imported crude oil, thereby lowering India's vulnerability to global oil price fluctuations.

Since the production of ethanol relies on domestically available raw materials such as sugarcane, promoting the increased use of ethanol-blended gasoline not only achieves the government's goal of enhancing energy security but also creates additional income for Indian farmers.