TS Singh Deo Urges Centre to Rationalise Taxes on E20 Petrol, Pass Savings to Consumers

Raipur, September 9: Former Chhattisgarh Deputy Chief Minister T.S. Singh Deo has written to Union Petroleum and Natural Gas Minister Hardeep Singh Puri, urging the Centre to rationalise the tax structure on E20 ethanol-blended petrol to ensure that the financial benefits of the blending policy reach ordinary citizens instead of being absorbed entirely by government revenues.

In his letter, Singh Deo acknowledged the macroeconomic and geopolitical benefits of the ethanol blending programme, including reduced crude oil imports, forex savings, and contributions to India’s climate commitments. He noted that India saved ₹43,000 crore in foreign exchange in 2025 alone due to ethanol blending, with lifetime savings crossing ₹1.44 lakh crore.

However, he argued that the rollout has placed a heavy financial burden on citizens. Despite crude prices dropping to around $65 a barrel and India benefitting from discounted Russian oil imports, retail fuel prices remain near record highs. He highlighted concerns such as reduced vehicle mileage, increased engine wear, insurance uncertainties, and inflated costs due to unfair taxation.

Singh Deo pointed out that while fuel ethanol is taxed at 5% GST, once blended with petrol, the entire E20 fuel is taxed as 100% petrol under excise duty and VAT. This, he said, “effectively denies consumers the benefit of lower-tax ethanol.”

Citing an illustrative calculation from Chhattisgarh, he said that the actual cost of E20 fuel works out to ₹91.45 per litre, and with dealer commission, to ₹94.95 per litre. Yet, retail prices in the state remain between ₹99.44 and ₹100.55 per litre, indicating that a ₹5 per litre saving could be passed on to consumers if the tax structure were rationalised.

The Congress leader also flagged issues of food security, noting that maize-based ethanol production surged to 42% in 2023-24, even as India faced a maize shortfall and was forced to import the grain. This, he warned, went against the safeguards envisioned in the 2009 National Policy on Biofuels introduced under Dr. Manmohan Singh.

Calling for urgent reforms, Singh Deo recommended:

• Retaining the ethanol portion of blended fuel under the 5% GST regime.
• Gradually bringing the entire fuel component under GST.
• Ensuring consumers benefit directly from ethanol blending savings.
• Issuing clear directives to protect vehicle owners from warranty and insurance disputes linked to E20 usage.

“The intent of ethanol blending was noble — energy security, farmer income, and environmental sustainability. Yet today, it is the ordinary Indian citizen who shoulders the hidden costs,” Singh Deo wrote, cautioning that without corrective measures, the E20 rollout risks being seen as “yet another example of crony capitalism and insensitivity to citizens in a high-inflation environment.”