The Central Government has raised serious concerns over the recent increase in levies on ethanol by Punjab, Haryana, and Himachal Pradesh, warning that these state-level charges could derail India’s ambitious ethanol blending program, hike petrol prices, and harm both economic and environmental goals.

The Ministry of Petroleum and Natural Gas has urged these states to reconsider their policy decisions, stating that such moves threaten to undermine the target of 20% ethanol blending by 2025-26 and 30% by 2030.

Why the Centre Is Worried

The ministry highlighted that:

• The additional regulatory fees on ethanol permits, increased license renewal fees, and state-specific import duties could restrict the smooth movement of ethanol within and across state borders.

• These extra costs will likely raise the price of ethanol-blended petrol, hurting consumers and discouraging higher blending ratios.

• The taxes are being imposed on a product already covered under GST, raising legal and policy concerns.

Notably, Punjab and Haryana are the only states to impose such exclusive duties on fuel-grade ethanol, even though both play a key role in the nation's agricultural and energy landscape.

Centre's Appeal to States

The Centre, in its official communication, urged state governments to withdraw or amend these new levies to ensure:

• Continued progress toward ethanol blending targets,

• Stable fuel prices,

• Protection of industry viability, especially as the sector faces pressure from rising raw material costs.

The Centre also expressed surprise over Haryana’s move, especially since it is governed by the BJP—the party leading the government at the Centre—and was expected to align with national policy.

Industry Also Raises Alarm

The Grain Ethanol Manufacturers Association has echoed the Centre's concerns, warning that:

• The ethanol sector is already under financial strain,

• Additional taxes could increase production costs and

• Impact employment and investment in rural areas.