Budget 2023 | FM proposes to exempt basic Customs duty on denatured ethyl alcohol to support ethanol blending

Finance Minister Nirmala Sitharaman presented her fifth Budget in the Parliament on Wednesday. Sitharaman proposed to exempt basic customs duty on denatured ethyl alcohol, which is used in the chemical industry. According to her, this will also support the Ethanol Blending Programme and facilitate the government's endeavour for energy transition.

"Basic customs duty is also being reduced on acid grade fluorspar from 5 percent to 2.5 percent to make the domestic fluorochemicals industry competitive. Further, the basic customs duty on crude glycerin for use in manufacture of epicholorhydrin is proposed to be reduced from 7.5 percent to 2.5 percent."

India achieved the target of 10 percent ethanol blending in petrol, five months before schedule, thereby managing to cut down carbon emissions by 27 lakh tonne, Prime Minister Narendra Modi had said on World Environment Day on Sunday.

In June 2021, the Centre had set the ethanol blending in petrol target of 10 percent by November 2022, which was achieved five months in advance. Union Minister Amit Shah had said last year that achieving the ethanol blending target in advance had made the Centre advance by five years the target of 20 percent ethanol blending to 2025.

Meanwhile, sugar producers are rushing towards ethanol blending. India's largest sugar refiner and ethanol producer Shree Renuka Sugars in June last year said around 20 percent of its revenue comes from ethanol which may increase to 30-35 percent as it doubles up the capacity.

Union Minister for Road Transport and Highways Nitin Gadkari has also been emphasising the need to switch from hydrocarbon fuels to ethanol-blended fuels, highlighting how the government is making an effort to introduce ethanol in construction and agriculture equipment.

Last week, The Food Ministry of India on Friday, January 27, gave in-principle approval to 11 more ethanol projects under new Ethanol Interest Subvention Schemes. The schemes, notified on April 22, 2022, are expected to add an additional capacity of 47 crore litres of ethanol.