Bio-diesel industry seeks govt grants to fuel growth

Written by ASHOK B SHARMA | New Delhi, Feb 1 | Updated: Feb 2 2008, 21:26pm hrs
The bio-diesel industry has demanded that the government give grants or subsidy for second generation bio-fuel technologies like producing fuels from algae. They argued that such grants or subsidies were given in the US and the European Union. Japan also supported research and development in bio-fuel technology, they said.

The industry also suggested "India should take the cue from countries like Germany to mandate blending of fuels." Bio-diesel should be categorised as "declared goods" with uniform rate of taxation across the country, exemption from Value-Added Tax (VAT) and sales tax on bio-diesel component used in blending and income tax exemption under section 80-1B are among other demands made by the Bio-diesel Association of India (BDAI) in a memorandum to the government.

BDAI president Sandeep Chaturvedi also urged the oil companies to set up infrastructure for distribution and retailing of bio-diesel. The automobile manufacturers should be encouraged to give warranty for facilitating higher blends of bio-diesel beyond 5%.

The BDAI has also urged the government to formulate a scheme for subsidising loans to farmers for growing bio-fuel crops. It demanded that the government give an initial grant of Rs 10 crore for setting up a centre of excellence to boost the bio-diesel sector and encourage its research capability.

It suggested, "30% subsidy of the input cost be given to farmers and for corporates undertaking fuel crop cultivation the subsidy should be extended without upper limit. Corporates having tie-ups with farmers should arrange for carbon credit and part of it should be shared with farmers based on mutual agreement. Government should allow alternative feedstock in case of low availability of Jatropha or low oil yields of Jatropha".

The bio-diesel industry urged the ministry for new and renewable energy sources to set up a multi-stakeholder committee to review and announce minimum purchase price of bio-diesel. The minimum purchase price for oil companies should be exclusive of all applicable taxes on bio-diesel. The bio-diesel industry suggested a formula based price mechanism linked with import price of raw materials and exchange of Indian rupee vis--vis US dollar.

BDAI said that the Centre should circulate a model land lease agreement to state governments and identify wastelands and degraded forestlands for cultivation of fuel crops. Local village governments (panchayats) should be involved and the revenue from lease rentals should be shared with them. It suggested 30-year lease agreement.