Sunday, 2 August 2015

ON THE BRINK OF 100% BIO-FUEL: A FORTUNE TUNER FOR BIO-FUELLERS

Government of India ("GOI") on July 31, 2015 issued a draft notification w.r.t. mass emission standards for vehicle engines that can operate completely on bio-diesel. As per India's legislative standards, the draft notification will become LAW once notified in the official gazette after considering suggestions/objections from general public.

The draft notification proposes to amend Central Motor Vehicle Rules, 1989 by inserting a new rule 115G (Mass Emission Standards for BIO-DIESEL (B100)According to the draft rule newly manufactured vehicles fitted with compression ignition engine compatible to run on diesel or mixture of bio-diesel up to 100% biodiesel (B100) shall be type approved as per prevailing diesel emission norms. The compatibility of vehicle to level of bio-diesel blend or B100 shall be defined by the vehicle manufacturer and the same shall be displayed on vehicle by putting a clearly visible sticker. Test requirements for the type approval and extension for different classes of vehicles are specified in the draft notification.

Once implemented, this will become a fortune tuner for the people and companies engaged into non-edible oil seed plantations, manufacturing and distribution of bio-diesel. As discussed in my earlier blogs, GOI has already decided to grant marketing rights to private bio-diesel manufacturers and as a result (i) Motor Spirit and High Speed Diesel (Regulation of Supply, Distribution and Prevention of Malpractices) Order, 2005 is likely to be amended to give marketing/distribution function to private bio-diesel manufacturers/their authorized dealers as well; (ii) relaxation is proposed in Marketing Resolution No.P-23015/1/20001-Mkt.dated 08.03.2002 to give marketing rights for B100 bio-diesel to private bio-diesel manufacturers/authorised dealers for direct sales to consumers; and (iii) The price of bio-diesel will now be market determined. 

Bio-ethanol already enjoys concessional excise duty of 16% and bio-diesel is exempted from excise duty. No other central taxes and duties are proposed to be levied on bio-diesel and bio-ethanol. Custom and excise duty concessions would be provided on plant and machinery for production of bio-diesel or bio-ethanol, as well as for engines that run on bio-fuels for transport, stationary and other applications, if these are not manufactured indigenously. 

Foreign Investors

Biofuel technologies and projects enjoy 100% foreign equity through automatic route provided bio-fuel is for domestic use only, and not for export. However, plantation (i.e. non-edible oil seeds etc.) is not open for foreign investment.

Sources

1. http://morth.nic.in/showfile.asp?lid=1765 (August 2, 2015). Draft Notification.  

2. http://mnre.gov.in/file-manager/UserFiles/biofuel_policy.pdf (June 21, 2015)

3. http://mnre.gov.in/file-manager/UserFiles/Cabinet-decisions-on-Biofuels.pdf (June 21, 2015)

4. http://petroleum.nic.in/Bio-Diesel.pdf (June 21, 2015)

5. http://petroleum.nic.in/docs/ethanol.pdf (June 21, 2015)

6http://timesofindia.indiatimes.com/home/environment/developmental-issues/India-closer-to-nod-for-100-biofuel/articleshow/48302376.cms (August 2, 2015)

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