Government lowers GST rate to 5% from 18% on ethanol meant for blending

In a written reply to a question in the Lok Sabha today, the Minister of State for Petroleum and Natural Gas, Shri Rameswar Teli, stated that in order to promote ethanol blending, the government has reduced the Goods and Services Tax (GST) rate on ethanol intended for blending under the Ethanol Blended Petrol (EBP) Programme to 5% from 18%. The procurement price of ethanol produced from sugarcane-based feed stocks such as C & B heavy molasses, sugarcane juice, sugar, and sugar syrup is set by the government on an annual basis, and the procurement price of ethanol produced from food grain-based feed stocks is set by Public Sector Oil Marketing Companies.

The government’s efforts to reduce reliance on imported gasoline include a number of policy initiatives aimed at increasing domestic crude oil production by generating quality geoscientific data and making it easily accessible, awarding new exploration acreage, expediting production from new development acreages, and focusing on production maximisation from existing production acreages. It has encouraged the use of biofuels in the country by announcing the National Policy on Biofuels (NPB) – 2018, which enables the use of diverse feedstocks for manufacturing bio-ethanol in order to enhance the supply of ethanol for blending with gasoline. The positive initiatives on the supply side of ethanol have persuaded the government to move the country’s aim of 20% ethanol blending in gasoline from 2030 to 2025-26. The government has also announced the Pradhan Mantri JI-VAN Yojna, which would provide financial assistance to promote Second Generation (2G) ethanol production from cellulosic and lignocellulosic sources, including the petrochemical route, throughout the country.