Centre expresses concern as Punjab, Haryana, Himachal Pradesh levy tax on ethanol
The Indian government has raised serious concerns over new levies on ethanol imposed by Punjab, Haryana, and Himachal Pradesh. The Union Ministry of Petroleum and Natural Gas warned these fees could disrupt the ethanol blending programme, increase fuel prices, and hinder environmental goals. States are urged to revise policies to maintain progress toward 20% blending by 2025–26.
Serious concerns have been raised by the Government of India regarding the imposition of additional levies on ethanol by the states of Punjab, Haryana, and Himachal Pradesh. The Union Ministry of Petroleum and Natural Gas has urged these states to reconsider recent policy changes that could hamper the country’s ethanol blending programme, increase fuel prices, and undermine environmental sustainability goals.
Incidentally, all three states have governments of different parties – Himachal Pradesh is ruled by the Congress government, Punjab has AAP in power and Haryana has a BJP government. It is Haryana which is of particular interest, as it was expected to follow the vision of the central government. However, the Haryana government decided to pursue an independent policy in raising the levies on ethanol.
It is in light of this that the Ministry has written to all three states. The letters were addressed individually by Mr Parveen M Khanooja, Additional Secretary in the Union Ministry of Petroleum and Natural Gas. The letter to Himachal Pradesh Chief Secretary Prabodh Saxena was sent on March 27, followed by a letter to Punjab Chief Secretary KAP Sinha on April 8, and another to Haryana Chief Secretary Anurag Rastogi on May 23.
In these letters, the Ministry highlighted that the new fees—such as regulatory charges on ethanol permits, increased licence and renewal fees for distilleries, and import duties—could disrupt the free movement of ethanol within and outside the states. These additional costs are expected to raise the price of ethanol-blended petrol, potentially slowing the national effort to increase blending levels.
The Ministry noted that such charges, when applied to a product already subject to GST, may also raise legal and policy concerns. The ethanol blending initiative is a key national mission aimed at reducing carbon emissions, cutting dependence on imported fuels, and supporting the rural economy by providing a market for agricultural produce.
Despite commendable progress in ethanol blending by these states—each nearing 18 per cent blending in the current ethanol supply year—the Centre emphasized that the introduction of such levies could stall future growth. The Ministry also pointed out that among all Indian states, Punjab and Haryana appear to be the only ones imposing such fees specifically on ethanol intended for fuel blending.
Industry stakeholders, including the Grain Ethanol Manufacturers Association, have echoed these concerns. According to the association, the ethanol industry is already under financial stress due to rising input costs and stagnant selling prices set by oil marketing companies. The Association warned that additional state-level charges may affect production viability and employment.
The Centre has called for the withdrawal or revision of the new levies to ensure continued momentum towards achieving the national target of 20% ethanol blending by 2025–26 and 30% by 2030. The government reiterated its commitment to working with states to align policies with national energy goals, promote cleaner fuels, and support the circular economy.
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Source : India Tv
