CII seeks lower customs duty on ethanol, market for CBG certificates

As part of pre-Budget recommendations, the Confederation of Indian Industry (CII) has suggested certain incentives and a policy roadmap for the bioenergy sector.

This includes the suggestion that concessional import duty of 2.5 per cent on ethanol be brought back to provide feedstock for the domestic industry at better rates. CII has sought clarification for concessional duty that was applicable on ethanol imported for use in manufacture of chemical products during the period from July 1, 2017 till February 1, 2021.

According to notification No. 50/2017 dated June 20, 2017 (Sr. No. 107), the basic customs duty (BCD) on Denatured Ethyl Alcohol (ethanol) HSN 2207 20 00 imported for use in the manufacture of excisable goods was 2.5 per cent for the period (July 1, 2017 till February 1, 2021). Customs officials are disputing the eligibility of concessional rate of customs duty on import of denatured alcohol used for the manufacture of organic chemicals, which are subject to GST even during this period. As per their interpretation, GST goods are not “Excisable goods”.

Suitable clarification should be issued confirming eligibility of concessional rate to GST goods as the concessional duty was introduced for chemical sector only. This is evident in the Union Budget speech 2016, wherein it was mentioned as a benefit under chemical and petrochemical sector for encouraging Make in India.

Shishir Joshipura, co-chair, CII Committee on Bioenergy, and CEO and managing director, Praj Industries, expects the Union Budget 2022-23 to accelerate progression of biofuels industry that facilitates fulfilment of India’s COP 26 summit Panchamrit commitments besides positively impacting energy security, farming community and economy.

“Specifically, interventions for un-bottlenecking achievement of E20 ethanol blending program, SATAT (Sustainable Alternative Towards Affordable Transportation) target for CBG (compressed biogas) and institutionalizing Flex-Fuel policy in the transportation sector, would be of great help. We also urge that the Budget unveils definitive road map for decarbonizing aviation sector by inducting sustainable aviation fuel in the energy mix,” he said.

CII has also called for a reinstatement of subsidy at least for the first 200 demonstrations of CBG projects. According to Tarun Sawhney, co-chair, CII Committee on Bioenergy and vice-chairman and managing director, Triveni Engineering & Industries Limited, the government support (financial) is important to unlock the potential available in CBG and exponentially grow this big opportunity which is nascent at present and thereby hugely benefit rural India.

“We eagerly look forward to the plan and allocation for development of a trading market for CBG Certificates for use towards carbon abatement as part of national carbon accounting standards (carbon scores) for CBG,” he said.