Union Minister for Road Transport and Highways, Nitin Gadkari, has made a compelling case for reducing the Goods and Services Tax (GST) on flex-fuel vehicles to 12%, down from the current 28% levied on internal combustion engine (ICE) vehicles. The minister's call was made during his address at the India Bio-Energy & Tech Expo organized by the Indian Federation of Green Energy (IFGE).
GST Reduction Proposal
Gadkari emphasized that the reduction in GST is essential to make flex-fuel vehicles more affordable and attractive to consumers. He mentioned that he has urged the Finance Minister to advocate for this change in the upcoming GST Council meeting and has also requested Maharashtra’s Finance Minister to support the proposal.
Environmental and Economic Impact
Flex-fuel vehicles, which can run on a mixture of petrol and ethanol, are seen as a key solution to reducing carbon emissions and lowering the country’s dependency on imported fossil fuels. Gadkari highlighted that India's annual fossil fuel import bill is approximately ₹22 lakh crore, and shifting to biofuels could significantly reduce this burden.
Bioenergy Advancements
Minister of Petroleum & Natural Gas, H. S. Puri, who also attended the event, underscored the growing importance of bioenergy as an alternative to fossil fuels. He pointed out the success of India's ethanol blending program, which has seen blending rates increase from 1.53% in 2014 to 15% in 2024, with a target of reaching 20% by 2025.
Economic Benefits
The ethanol blending initiative has not only reduced CO2 emissions by 519 lakh tonnes but also saved ₹99,014 crore in foreign exchange over the past decade. Moreover, Oil Marketing Companies (OMCs) have disbursed ₹1,45,930 crore to distillers and ₹87,558 crore to farmers, showcasing the program's significant economic impact.
Conclusion
The proposed reduction in GST on flex-fuel vehicles could play a pivotal role in accelerating the adoption of biofuels in India, contributing to both environmental sustainability and economic growth. With support from key stakeholders like the Finance Ministry and state governments, this move could mark a significant step forward in India's green energy transition.
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