Government abolished excise duty on ethanol fuel, who will get the most benefit from it?

The central government has decided to exempt ethanol blended petrol (E22, E25, E27 and E30) from central excise duty from 22% to 30%. This step of the government will not only promote ethanol blended petrol but will also reduce the dependence on crude oil imports. Now the question is who will benefit from this decision of the government.

In fact, not only will the general public benefit from it, sugar and ethanol companies and oil marketing companies will also benefit from it. Let us understand how this decision will affect whom.

These businesses will get strength

The biggest benefit of this decision can be given to those companies which are active in ethanol production. Increase in demand for fuel with higher ethanol blend will strengthen the sugar mills and distillery business. Maize and sugarcane farmers will be able to benefit from this. In fact, the income of farmers can increase due to increase in demand for sugarcane and grain based feedstock for ethanol production.

How will oil companies get the benefit?

After this decision of the government, oil marketing companies which were till now dependent on the import of crude oil. This step will reduce dependence on imports. Major oil companies of the country like Hindustan Petroleum, Indian Oil, Bharat Petroleum etc. can get help in increasing the sales of ethanol blended fuel. India is the world’s third largest oil importer. In such a situation, promoting the use of ethanol will reduce dependence on foreign oil and the impact of fluctuations in global crude oil prices can be limited.

What benefit will the general public get?

Oil companies and farmers will definitely benefit from this decision of the government. Besides, its impact will also be visible on the pockets of the general public. However, no immediate change in the retail prices of petrol and diesel has been announced yet. But in the long run, fuels with higher ethanol blends could help control costs and strengthen energy security. The prices of petrol and diesel have increased four times since the Bengal elections. Oil companies are citing their losses. In such a situation, the government has played this masterstroke of ethanol. This cannot be called immediate relief but the effect of this decision will definitely be visible in the long run.