ISMA says GST rationalisation on flex-fuel vehicles, crucial for ethanol ecosystem

New Delhi [India], January 1 (ANI): The GST rationalisation on flex-fuel vehicles and higher ethanol blends should be addressed to in the upcoming Union Budget to support clean mobility and stabilise the ethanol ecosystem, said Deepak Ballani, Director General, Indian Sugar and Bio-energy Manufacturers Association (ISMA) told ANI on Thursday.
"From the union budget, we are expecting a GST rationalisation specifically when I said that in order to enhance the consumption of ethanol, we need to look into new avenues," he told ANI in an exclusive interview.
Highlighting the tax disparity between clean technologies, he said, "For a clean technology, for example, EV, if the GST is 5%, why can't we extend the same GST for even the flexi-fuel vehicle? Because even flexi-fuel and strong hybrid are clean technology vehicles."
Currently, GST on flexi-fuel and strong hybrid vehicles is around 18%. "In the small vehicle segment, I believe it is around 18% as of now. It has to be brought down to 5% at the level of electric vehicles," Ballani said.
He also called for GST relief on ethanol-blended fuels. "On the E85, or E100 fuel, the GST could be brought down from 18% to 5% which will make E100, E85 slightly cheaper than the normal petrol and will enhance the acceptance by the consumers," he said.
On exports, Ballani said, "We got the permission to export 15 lakh tons of sugar in November and the pace is slowly picking up," but added that pricing remains a concern. "The international prices of white sugar is quite low and we are not getting a very good international parity," he said.
"At the moment, the international buyer, we are getting a rate of around $446 per ton to around $448 FOB," Ballani said, adding, "There is no parity in the prices of sugar as Indian prices are higher than global prices as of now." By comparison,
"International for the London white is today morning which I saw it $426 dollar a ton," he said.
However, he expressed optimism for the coming months. "We are hoping that with Brazil sugar now from January onwards will not be available in the international market," Ballani said. "Around 1.5 lakh to 2 lakh tons of sugar have been contracted and around 50,000 to 60,000 tons have been physically exported," he added, noting, "We are looking forward for the export to pick up now from January onwards."
On domestic supply, Ballani said, "We opened our season with 50 lakh tons of sugar and the production is progressing very well."
He said production is expected to reach at least 345 lakh tons of sugar this year while domestic consumption is estimated at around 284-285 lakh tons. Even after ethanol diversion and exports, "we will close the season with almost 59-60 lakh tons which is a very big stock to carry over," he said.
The surplus has already impacted prices. He said that the Maharashtra's ex-mill prices are much below the cost of production.
Citing the problem of plenty, he said "too much of stock is also hampering and disturbing the domestic market prices." He cautioned that if prices do not recover, it would affect mills' capacity to make timely payments to farmers.
Ballani said the sector is facing challenges after achieving the E20 blending target. "Today we have the overcapacity of ethanol and the consumption is limited to only 20%," he said, noting that low allocation to distilleries has impacted viability in several states.
On the new sugar season, Ballani said, "Everything is new, the season has started, the season is doing very well and we are going to start with many new initiatives." (ANI)