India's clean-fuel roadmap has taken another major step forward in the Union Budget 2026. After the nationwide roll-out of 20% ethanol-blended petrol (E20) from April 1, 2025, Finance Minister Nirmala Sitharaman has today announced phased blending of Compressed Bio-Gas (CBG) into Compressed Natural Gas (CNG) used for transport. The move mirrors the government's earlier ethanol push and aims to cut fossil-fuel dependence while boosting domestic bio-energy production. This will also cut down carbon emissions.
CBG Blending With CNG And PNG
One of the biggest announcements for the auto and energy sectors is the decision to mandate phased blending of CBG with both CNG and Piped Natural Gas (PNG). This shift is expected to lower emissions, increase farmer income through agri-waste utilisation, and reduce import bills on natural gas. For the automotive market, it will mark India's second major blended-fuel transition after E20.
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EV Ecosystem To Be Expanded
The Finance Minister also reiterated the government's intent to strengthen India's electric mobility ecosystem. "Our Government will expand and strengthen the e-vehicle ecosystem," she said, announcing greater support for EV manufacturing and charging infrastructure. A key highlight is a mechanism to encourage the adoption of e-buses in public transport via a strengthened payment security framework for state and city transport corporations.
Big Push For Battery Manufacturing
To boost domestic production further, the Budget proposes to add 35 additional capital goods to the exempted list for EV battery manufacturing, and 28 more items for mobile phone battery production.
Additionally, Basic Customs Duty will be fully exempt on cobalt powder, lithium-ion battery scrap, lead, zinc, and 12 more critical minerals. This comes on top of the 25 critical minerals exempted in the July 2024 Budget, strengthening India's raw-material security.
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Tax Relief For Accident Victims
In a significant welfare measure, the Finance Minister proposed that any interest awarded by the Motor Accident Claims Tribunal to a natural person will be fully exempt from income tax, with no TDS applicable.