ISMA Urges 5% GST Rate for Flex Fuel Vehicles, Matching Electric Vehicles

Mumbai, 28 Aug (Commoditiescontrol):To promote the use of ethanol-blended fuels, the Indian Sugar Mills Association (ISMA) on Monday called for a Goods and Services Tax (GST) rate of 5% on flex fuel vehicles (FFVs), placing them on par with electric vehicles (EVs).

Flex fuel vehicles have the capability to run on a mixture of petrol and ethanol in varying ratios. While India has currently achieved the E10 blend (10% ethanol in petrol), the goal is to reach E20 by 2025.

ISMA's statement highlighted that FFVs currently attract a GST rate of 28%, a stark contrast to the 5% GST rate levied on electric vehicles. The association believes that equalizing the GST rates would not only help reduce India's fuel costs but also diminish carbon emissions from the transportation sector.

ISMA President, Aditya Jhunjhunwala, stated, "Presently, FFVs are levied with a GST rate of 28%, a notable contrast to the 5% GST rate applicable to electric vehicles. We request parity in the GST rebate for FFVs." Jhunjhunwala emphasized that such a move would acknowledge the ecological significance of FFVs and encourage consumers to adopt green transport options without incurring substantial financial costs.

"Offering tax deductions for FFVs could incentivize the adoption of eco-friendly vehicles, promoting a greener transportation choice," Jhunjhunwala further added.

Furthermore, the association has been proactive in its outreach, connecting with the Automotive Research Association of India (ARAI). The ARAI is engaged in the development of anhydrous ethanol blends with gasoline. ISMA is keen on exploring the potential benefits of E-100 hydrous ethanol blends. The vision is inspired by Brazil's successful transition to ethanol-heavy fuel systems.

For the 2022-23 ethanol supply year ending in November, the government has set a blending target of 12% for ethanol with petrol. It's noteworthy that oil marketing companies source a considerable quantity of ethanol from sugar mills. Additionally, ethanol production is also ramping up from other resources like rice and maize.