Union Budget 2020: What the biofuels industry expects

Last Updated 27 January 2020, 12:17 IST

By Shiva Vig

Considering the increasing adoption and demand for biodiesel in India, the Union Budget 2020 can allocate funds to develop an effective framework to meet the rising demand for biofuels in the country.

While sharing his expectations and recommendations for the upcoming Union Budget 2020-21, on behalf of the oil and energy sector, Vig says, “Looking at the grim situation of smog and hazardous air pollution around Diwali festival in northern India and other parts of the country, identifying and implementing new and sustainable fuels is need of the hour. Usage of biodiesel not only in automobiles, residential generators, but also in industrial use, typically brings a reduction in greenhouse gases from 75-90 per cent everywhere relative to fossil diesel. Thus, dedicated funds must be allocated for developing the infrastructure for such biodiesel producing units.

The policy Biofuels-2018 approved by the Government envisages an indicative target of 20% blending of ethanol in petrol and 5% blending of biodiesel in diesel by 2030.

Biodiesel alone has a huge potential given 70% of transportation runs on diesel currently. To be noted, air pollution due to diesel combustion exhaust is a major cause of critical illnesses like cancer, heart and lung damage, and mental disorder. So mass adoption of biodiesel can save the country from these implications and can reduce the economic burden due to health covers and insurance plans.

Reflecting his optimism, Vig says, "The industry is optimistic that the 2020-21 Union Budget will put ample focus on the biodiesel industry aligned with the government's mission to provide cleaner and greener fuel. We are hopeful that there will be enough fund allocation for establishing an effective framework to meet the demand of biodiesel in the country.”

Vig on behalf of the oil and energy sector requests the government to consider the following demands:

  • To reach the aspired target of reducing foreign exchange by 12,000 crores over the next three to four years, there are a few changes and innovations that the government must include in the upcoming budget 2020-21.
  • There should be a strong push on the investments in the biodiesel industry which have witnessed escalation and show immense potential. Thus, dedicated funds must be allocated for developing the infrastructure for such units.
  • There should be zero duty on the import of the machinery for putting up a biodiesel manufacturing plant.
  • Animal fat should be brought in the export bank for domestic as well as international biodiesel production so that India could take advantage of it for energy security
  • To encourage domestic manufacturing, easy access to loans and priority sector lending must also be given. In the long run, it will also promote 'Make in India’.
  • A five-year tax holiday window should also be given for the proven innovators in the biofuel sector.
  • All products and services related to biodiesel should come under the 5% GST category.

(Shiva Vig is Group CEO, BioD Energy (India) Pvt Ltd)

(Published 27 January 2020, 12:17 IST)

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