High taxes are holding back biodiesel in India

The Biodiesel Association of India (BDAI) claims that high taxes are making biodiesel substantially more expensive than regular diesel in the country. The association has also called on India’s central government to continue with excise duty exemptions for the sector.

“The industry is just not moving ahead because of skewed rates of taxation, which continue to be a major hurdle.” Sandeep Chaturvedi, President of the BDAI, told the Hindu.

“The taxes by the state government are very high. As soon as biodiesel is blended with diesel, the taxes can go as high as 20-30% depending on the state government. The biodiesel itself becomes 7-8 rupees [0.09-0.1 euro] more expensive than diesel because of the tax element.”

India has a target of a 10% reduction in oil imports. Chaturvedi said that India’s annual biodiesel consumption would have to increase dramatically if that was to be achieved.

Chaturvedi explained that the BDAI had approached India’s central government but it could not alter state level taxes. He pointed out that a few states had taken the initiative and lowered their biodiesel tax rates, such as West Bengal and Andhra Pradesh.

A lack of clear biodiesel policy is a persistent problem in India, according to Chaturvedi. “We have spoken to [New and Renewable Energy Minister] Piyush Goyal,” Mr. Chaturvedi said. “When he speaks of renewables, he speaks of solar and wind. Biodiesel gets no mention. But you cannot wish it away.”