India Wants More Biofuels, But Supply and Convoluted Tax Laws Hamper Efforts

sugar cane truck photo

photo: Erin Collins via flickr

With all the recent wrangling over California's Low Carbon Fuel Standard and the Federal Renewable Fuel Standard it's heartening (if only in the ever popular spirit of schadenfreude) to see that other nation's efforts to promote biofuels don't go entirely smoothly either. India had established a mandate that all gasoline be blended with 10% ethanol as of October 2008, but supply shortages and inter-state tax structures are hamstringing efforts:Rising Sugarcane Prices Make Ethanol Too Expensive
Sugarcane is the most popular feedstock for ethanol in India; as prices for sugarcane rose—going up 40-50% this year—producers found that making ethanol from it wasn't as profitable as they had hoped, and have found it difficult to even produce enough to meet the previous mandate of 5% ethanol blending.

Federal Government Could Step In to Fix Double Taxation
Added to that are restrictive inter-state tax laws that result in multiple taxation on ethanol, particularly impacting states which don't produce sugarcane and further hampering success of the blending mandate. To solve this issue Parliament has the power to step in and assess a federal sales tax of 4% on goods declared to be of special interest to interstate trade.

via: Cleantech, The Economic Times
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