The government has postponed the imposition of a Rs 2 excise duty on unblended petrol by one month to November 1 and on unblended diesel by six months to April 1 next year, according to a notification from the finance minister.
The excise duty on diesel and petrol that are not blended with ethanol and biodiesel was supposed to go into effect on October 1, according to the Budget 2022.
.
“Petrol which is intended for retail sale, not so blended with ethanol or methanol will attract Rs 3.40 per litre basic excise duty effective November 1, 2022, instead of Rs 1.40 a litre currently. Branded petrol, not doped with ethanol, will attract Rs 4.60 a litre excise duty as against Rs 2.60 currently,” according to the notification issued by the Finance Minister on September 30.
In the case of diesel, it said the fuel “intended for retail sale, not so blended with alkyl esters of long chain fatty acids obtained from vegetable oils, commonly known as bio-diesels" shall attract Rs 3.80 a litre basic excise duty instead of Rs 1.80. Branded diesel will attract Rs 6.20 a litre basic excise levy as against Rs 4.20 currently.
In order to decrease crude oil imports, 10% ethanol, which is made from leftover food grains or sugarcane, is currently blended with gasoline. However, bio-diesel, which is made from non-edible oilseeds, is only being blended experimentally with diesel, the most common fuel in the nation.
The central government had set the goal of blending 10% ethanol into petrol by November 2022, which was accomplished five months ahead of schedule in June 2021. By hitting the goal early, the government was able to push back its 20 percent ethanol blend goal by five years, to 2025.
Finance Minister Nirmala Sitharaman in her Budget Speech 2022 said, “Blending of fuel is a priority of this government. To encourage the efforts for blending of fuel, unblended fuel shall attract an additional differential excise duty of Rs 2 per litre from the 1st day of October 2022."
Over 80% of India's crude oil needs are imported. The country's dependence on crude oil imports, which increased from 172 million metric tonnes (MMT) in 2011–12 to 212 MMT in 2021–22, can be lessened with the help of biofuels.
While the additional duty will push oil companies to procure more ethanol for mixing in petrol and arrange for logistics for transporting to deficient areas, it is unlikely that the country will be able to build infrastructure to manufacture biodiesel in the scale needed for blending in diesel.
(with inputs from PTI)
