New Delhi: The government will have to look at not only reducing the price of high-ethanol blended petrol and pure ethanol, but also the cost of flex-fuel vehicles (FFVs), which will use the fuel, to create high demand among consumers, experts said, admitting that the current 20% blending has helped save India nearly 4.5 lakh barrels of imported crude oil annually.The government on Friday announced Rs 82.12 per liter retail price for 85% ethanol blended petrol (E85) in Delhi compared to Rs 102.12 per liter for the current 20% blended fuel. Two major automobile companies this week launched two flex-fuel bikes and a car, a move seen as an attempt to reduce India’s dependence on imported crude oil.Officials involved in preparing the roadmap for FFVs and high ethanol use said that using 85-100% ethanol as fuel could reduce a vehicle’s mileage by up to 30%.
“So, you can’t expect customers to choose these vehicles unless the price of higher ethanol blends is reduced proportionately to compensate for the lower mileage. Second, FFVs will be priced higher than gasoline vehicles as manufacturers make them more fuel and materials compatible, and have more sensors.”
“This also needs to be addressed,” one of them said.Last year, Petroleum Minister Hardeep Singh Puri wrote to Finance Minister Nirmala Sitharaman seeking GST parity between FFVs and EVs.
Currently, the GST for FFVs is 28% compared to just 5% for EVs.Even at a meeting called by the Petroleum Ministry in March last week, automakers cited the need to address consumer concerns, particularly regarding the need to reduce fuel costs and tax incentives to make FFVs more affordable. Officials had informed the industry that they have taken up reduction in GST rate on FFVs and ethanol as fuel with the Finance Ministry.