Raising concerns over the implementation of the Goods and Services Tax (GST), the Biodiesel Association of India feels higher GST rates could adversely impact the sector.
"High GST rate could shut the biodiesel industry, which is already reeling under the pressure of complex and varied taxation policies of the states. Lack of clarity on the policy front has made it even more vulnerable for the industry players," the association said in a statement issued here.
The government wants to cut its crude import by 10 per cent, but the high incidence of tax on biodiesel will make it costlier than diesel and ultimately make it uncompetitive, the association said.
"It is a matter of great despair as 18 per cent GST would make biodiesel costlier than diesel, while the thrust globally is on eco-friendly and renewable fuel," BDAI President, Sandeep Chaturvedi said.
He said the high tax rise of Rs 5 per litre would restrain mass consumption by even existing users like OMCs, railways and road transporters. Also, farmers will switch back in to use of polluting fuels and other products.
Under the GST rates announced recently, biodiesel, ethanol and other mixing products would be charged 18 per cent.
For the last 10 years, biodiesel attracted zero excise duty and even some states like West Bengal, Uttar Pradesh, Uttarakhand, Chhattisgarh and Rajasthan, charged zero Value Added Tax (VAT) on biodiesel, BDAI said.
"The real start to biodiesel supply in India commenced only two years ago and is very much in its nascent stage. Having had the zero excise duty for the last 10 years, replacing the same with a very high 18 per cent GST is totally biased against this renewable and eco friendly fuel," he said.
Chaturvedi further said while Prime Minister Narendra Modi is pushing for Swachh Bharat with a cess and cutting consumption of crude oil to push green biofuels, higher GST rate on biodiesel contradicts the government's efforts to push this clean and green fuel.
"We were hopeful that the government's intentions are clear and it would revive this green industry. However, it appears the GST Council failed to realise the importance of biofuels. There is an urgent need for course correction," he added.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)