Biodiesel industry seeks fiscal sops

This budget proposed customs duty reduction on import of biodiesel. Industry wants the government to extend matching fiscal sops to promote domestic production
Noor Mohammad Delhi Hardnews

The biodiesel industry has hailed Finance Minister Pranab Mukherjee's move to reduce customs duty on import of biodiesel from 7.5 per cent to 2.5 per cent as a first step towards promoting use of biodiesel as an automotive fuel. But it has pointed out that this move will benefit overseas producers of palm oil more than the domestic industry. The government should extend matching fiscal sops to promote the domestic production of biodiesel, industry insiders felt.

The Biodiesel Association of India (BAI) is expected to submit a memorandum to the finance minister soon, Sandeep Chaturvedi, the association's president, told Hardnews.

"In India, where all products are sold and purchased as per Bureau of Indian Specifications (BIS), this aspect is of primary importance for transport fuel. Till such time BIS specifications are published for up to 20 blending, the concession announced in the budget cannot be properly utilised," Chaturvedi said.

"We call upon the respective departments of the government of India to take expeditious action for early finalisation and publication of BIS specifications up to 20 per cent blending of biodiesel with HSD," he said. At present, BIS specification is in place only for 5 per cent biodiesel blend.

"The engines where biodiesel blended diesel is used, cost between Rs one lakh and Rs 10 lakh. Engine manufacturers specify the type of fuel and lubricant to be used in their engines to take advantage of engine performance and warranty," BAI president pointed out.

Most of the engines popularly used in the Indian market do no recommend biodiesel blended fuel up to 20 per cent blend. This will seriously hamper the intended objective of the Centre  to popularise biodiesel in near future. The engine manufacturers, oil marketing companies and other related agencies need to resolve this issue at the earliest.

Whereas the concessions on import of biodiesel will benefit palm oil growing countries like Indonesia and Malaysia, similar benefits will not be available simultaneously to organisations and individuals engaged in indigenous cultivation and plantation of feedstocks. Matching financial encouragement to Indian feedstock producers must also be considered.

In line with the custom duty concession on finished biodiesel, concession should also be extended to imports of feedstock (free fatty acid and non-edible oils). This will encourage running of over a dozen biodiesel processing units in India which are presently idle due to non-availability of indigenous feedstocks. This will also generate local employment.