India's push beyond E20 fuel: Reasons, and pitfalls, Pg14

Key Highlights:

• The Centre exempted higher ethanol-petrol blends (22%-30% ethanol) from Central Excise Duty, aligning their tax treatment with E20 fuel.
• Proposed amendments to the Central Motor Vehicles Rules aim to recognize 85% and 100% ethanol fuels.
• India achieved its E20 blending target five years ahead of schedule.
• The move aims to reduce India's dependence on imported fossil fuels and support the agricultural sector.
• Carmakers and motorists have raised concerns regarding potential engine damage, reduced mileage, and increased costs with higher ethanol blends.

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Detailed Insights:

• The exemption for E22-E30 blends targets most existing petrol cars, while E85 and E100 are for future flex-fuel vehicles.
• Consumers face issues like engine corrosion, especially in older vehicles and two-wheelers, due to ethanol's higher water content.
• A mileage drop of 5-12% has been observed by customers transitioning from E10 to E20 fuel.
• Unlike Brazil, Indian vehicle owners currently lack options for different fuel blends at petrol pumps.
• Automakers anticipate increased engineering, validation, and vehicle costs for adapting to higher ethanol blends.
• Oil Marketing Companies (OMCs) have indicated they can only offer two ethanol blends at any given time.
• India imports approximately 88.5% of its crude oil, making energy security vulnerable to geopolitical events.
• The Bureau of Indian Standards (BIS) has notified fuel standards for these higher ethanol blends.
• New vehicles will require recalibration, fresh emissions certification, and homologation for higher blends.

Key Concepts Involved:

• E20 fuel: A blend of petrol containing 20% ethanol, currently the standard in India.
• Flex-fuel vehicles: Automobiles designed to operate on varying proportions of petrol and ethanol, or 100% ethanol.
• Homologation: The process of certifying a vehicle or component to meet specific regulatory standards for roadworthiness.
• Central Excise Duty: An indirect tax levied by the central government on goods manufactured or produced within India.