India plans to reduce duty on alcohol to boost ethanol blending

India’s petroleum ministry has proposed a reduction in the customs duty on denatured alcohol and molasses, to help boost the government’s 5% ethanol-blending program which encountered problems when sugarcane production dropped earlier in the current year. The ministry is considering reducing the duty on denatured alcohol from 7.5% to 5%. The duty on molasses, officials said, is also likely to be reduced from 10% to 5%. Blending at 5% requires 600 million liters of ethanol annually. However, government data showed that there has been a 40% ethanol shortage this year. Oil marketing companies (OMCs) have been unable to take up blending in states like Tamil Nadu and Kerala due to the taxation policy of the governments of these states and other procedural bottlenecks. (May 24, 2009)