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Industry Demands Drop In GST Rates On Bio Diesel From 18 To 5 Percent

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New Delhi: The Biodiesel industries have demanded GST rates to be slashed from the current 18 percent to five percent, as they are finding it difficult to survive despite the government’s clean energy mission.

It may be noted that the demand came days after the solar industry made a similar pitch, raising concerns over high cess on the solar panels. The Solar industry felt that the high tax rates were giving an edge to Chinese exporters.

On Tuesday, the Biodiesel Association of India (BDAI) penned a letter to the Union Finance Minister Arun Jaitley and the state FMs of West Bengal and Rajasthan seeking reduction on high GST rate pertaining to the industry.

The apex industry body pointed out that while there is a huge potential of producing more cleaner fuel in India, the extraordinary levy has bought the industry at the “brink of extinction”.

With implementation of GST from July 1, 2017, levy on Biodiesel has gone from 6 percent in excise duty to 18 percent in GST.

“This has made Biodiesel costlier than High Speed Diesel (HSD) and biodiesel users will not get any Input Credit for use of it. Both these put together, effective cost of Biodiesel has become unviable to the end users. Eventually the entire Biodiesel industry will come to a halt, despite this Green Fuel having such environment and social benefits,” BDAI said in the letters.

Made directly from edible oil in equal quantity, of which India is second highest consumer, the bio-diesel helps in reducing the emissions by 30 to 100 percent, depending upon its blend in the normal diesel.

“With 18 percent GST, the price come around Rs. 10 per litres, this is equivalent to normal diesel,” BDAI President Sandeep Chaturvedi told IANS.

At present few states like Karnataka use 100 percent or zero emission biodiesel buses, while states like Andhra Pradesh use 20 percent blend bio-diesel.

“This means cleaner environment, drop in imports and several jobs,” Chaturvedi said.

Indian Railways, state transport corporations, port authorities, construction and mining, jute, textile and chemical manufacturers among others are users of biodiesel in India.

Currently, India has an installed capacity of 12 lakh ton per annum of biodiesel, of which actual production is 3.5 lac ton per annum, however, estimated or potential production is about 27.5 lakh tons per annum.

“The industry employs 25,000 people directly and 100,000 people indirectly and with the demand, employment requirement would go to an estimated 500,000,” Chaturvedi said.

He further added that by replacement of 3.95 million MT diesel by biodiesel, India would save its foreign currency of approx. S$1.47 billion.

“This can go further up with increase in Blend Ratio from 5 per cent to 20 per cent,” he said, adding that the biodiesel industry is also in discussions with the defence sector.

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