The Government is mulling giving tax incentives like excise and import duty exemption to promote the use of biodiesel and ethanol in auto fuels so as to cut down country's import dependence to meet its fuel needs.
The Ministry of Non-Conventional Energy Sources, now re-christened as Ministry of New and Renewable Energy, in the draft National Policy on Biofuels has suggested a slew of fiscal incentives and a National Biofuel Development Board headed by Prime Minister Manmohan Singh to promote doping of petrol with ethanol and diesel with non-edible oil.
Official sources said the ministry's draft note for the Cabinet proposes excise duty exemption to biofuels in pure as well as blended form up to a certain percentage with a view to lowering price of the biofuel for the end user.
It also proposed custom and excise duty exemption to plant and machinery used for processing oil seeds for biofuel production.
Besides, excise duty exemption to biodiesel blended with duty-paid diesel, similar to the concessions given for ethanol blended petrol made by mixing duty paid petrol, is proposed to be provided.
Sources said the draft policy also proposed setting up of a National Biofuel Development Board to fix Minimum Support Price (MSP) for non-edible vegetable oil seeds required for conversion to biodiesel and other biofuels such as ethanol.
NBDB, which is proposed to be headed by Prime Minister, would also prepare a National Road Map on bio-fuel in petrol and diesel engines in a time-bound manner.