Union Budget 2022: Additonal Excise Duty Of Rs. 2 Proposed On Unblended Fuel

In her last annnouncement before she concluded the budget speech for FY2022-23, Union Finance Minister, Nirmala Sitharaman, brought forth a significant measure which the government hopes will help increase the production and use of Ethanol-blended fuel thereby pushing automakers to manufacture flex-fuel engines in the country. To dissuade the use of unblended fuel, an additional excise duty of Rs. 2 will be levied on it starting from October 2022. Blended fuels are a mix of Petrol or Diesel with liquids like Ethanol, and the result is lesser emissions.   

Govt had recently approved a proposal to achieve 20% ethanol-blending with gasoline by 2025.

Industry Analysts feel this new measure will help in multiple ways. "An additional levy of Rs. 2 per litre on unblended fuel is a message to the Auto Industry to look at introducing vehicles which can run on blended ethanol (currently at around 7% or so with intentions to move it to 15%) and Petroleum. It will be help in reducing import bills and also take care of pollution.", said Sridhar.V, Partner, Grant Thornton Bharat LLP.

Also read: Ethanol Blend (E20) In Petrol, Everything You Need to Know

The Union Road, Transport and Highways Minister Nitin Gadkari has been advocating the use of blended fuels for sometime now. In December 2021, he had advised automakers to begin manufacturing flex engines that run on blended fuels within 6 months. The government had recently approved a proposal to achieve 20 per cent  ethanol-blending with gasoline by 2025, five years ahead of its previous target. India is the third-largest country in the world when it comes to oil imports and lesser fuel consumption will help reduce the overall import bills.