NEW DELHI: There’s no escape from high fuel prices, but it will not just be because of oil price volatility. The Budget has given the government an enabling provision to levy a ‘differential’ excise duty of Rs 2 per litre on unblended fuel from October 1.
On the surface, the measure appears to indicate the government’s intent to force the manufacturing of ‘flex’ engines that can run on more than one fuel and drive consumers towards using ethanol-blended petrol or pure ethanol under an initiative launched last year with the aim of reducing vehicular pollution and oil imports.
“To encourage the efforts for blending of fuel, unblended fuel shall attract an additional differential excise duty of Rs 2 a litre from the 1st day of October 2022,” finance minister Nirmala Sithara- man said in her Budget speech on Tuesday.
But in the absence of further elaboration, it looks likely that the government will tout this as a ‘climate action tax’ to recoup part of the excise duty relief it provided on November 4 last year.
