Union Minister Nitin Gadkari Advocates for Reduced GST on Flex-Fuel Vehicles
As India seeks to reduce its reliance on fossil fuels, Union Minister for Road Transport and Highways Nitin Gadkari urged state finance ministers on Monday to advocate for a decrease in the Goods and Services Tax (GST) on flex-fuel vehicles during the upcoming GST Council meeting.
Speaking at the India Bio-Energy & Tech Expo organized by the Indian Federation of Green Energy (IFGE) in New Delhi, Gadkari stated, “We require the support of finance ministers from various states in the GST Council. I recently discussed this with the finance minister of Maharashtra and suggested proposing a reduction in the GST on flex-fuel cars and scooters to as low as 12 percent.”
The sugar industry has been particularly vocal in requesting a 5 percent GST rate on flex-fuel vehicles, similar to that for electric vehicles. As of now, flex-fuel vehicles are subject to a GST of 28 %, a uniform rate applied to both two-wheelers and four-wheelers. However, some automakers, who have heavily invested in electric vehicle production, have previously opposed this rate reduction.
In March, the Ministry of Heavy Industries received numerous requests advocating for lower GST rates for these vehicles. The GST Council which is composed of finance ministers from various states and Union Finance Minister.
Gadkari highlighted that 85 percent of the transport sector currently relies on fossil fuels and emphasized the significant potential for growth in biofuels. In October 2023, the Ministry of Road Transport and Highways also advised states to consider lowering road taxes on flex-fuel vehicles, similar to the concessions made for electric vehicles, to aid in decarbonizing the transport sector.
The minister reassured automakers about the feasibility of flex-fuel vehicles, noting that the expansion of road infrastructure in India will lead to increased tourism, subsequently driving up demand for commercial vehicles that can operate on alternative fuels. He projected that the biofuel economy could reach half the size of the fossil fuel economy within the next five years.
