Carmakers push for cheaper high-ethanol fuels, tax breaks for flex-fuel vehicles

Subscribe to enjoy similar stories.New Delhi: India’s automakers have told the government that consumers are unlikely to adopt flex-fuel vehicles unless high-ethanol fuels such as E85 and E100 are priced significantly below petrol, according to two people aware of discussions between the petroleum ministry, oil marketing companies, and auto lobby group Society of Indian Automobile Manufacturers (Siam).The industry has sought lower retail pricing for high-ethanol fuels along with tax benefits as the government accelerates work on a roadmap for higher ethanol blending amid rising energy security concerns.In Brazil, where most vehicles can run on E85 or E100 fuels, high-ethanol blends are priced lower than the standard E27, according to the country’s national agency of petroleum, natural gas, and biofuels.

E85 and E100 fuels require dedicated flex-fuel-compatible engines, unlike E20 petrol currently used in regular vehicles in India.“The incentives sought include a reduction in the GST (goods and services tax) rate on flex-fuel vehicles as well as some benefit for consumers on opting to use high ethanol blends,” one of the people cited above said on condition of anonymity.Currently, flex-fuel vehicles—even though there are none available commercially in India as of today—are taxed at the same rates as conventional internal combustion engine vehicles, ranging from 18% for smaller cars to as high as 40% for larger models.However, according to the second person, the proposal for GST rationalization has so far been limited to two-wheelers, since lowering taxes on cars would place flex-fuel vehicles closer to electric vehicles, which attract 5% GST.A spokesperson for Hero MotoCorp said the company is actively developing