India’s GST tax plan may slow biodiesel, ethanol adoption

June 27, 2017 |

In India, the Times of India is reporting that a 18% GST tax that has been proposed for ethanol and biodiesel is expected to slow efforts to increae blending, according to experts and producers polled by the news outlet.

G Chandrashekhar, commodity expert and Biodiesel Association of India honorary member told The Timnes, “Tax on ethanol and biodiesel will be a disincentive and is like a punitive tax. Taxes on these should be as low as possible.”

Ironically, as India turns towards increased blending targets for ethanol and biodiesel, the central government has propsoed to exempt fossil gasoline and diesel from GST tax, but tax renewables instead. Biodiesel has reached as high as 2% effective blending rates in the eastern part of the country, but numerous states are lagging behind that volume, and part of the reason is the differing tax treatments of renewables and fossil fuels from state to state. Ethanol blending topped out at 4% in 2016, but has dropped this year despite higher blending targets due to shortages of sugarcane.

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Category: Policy

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