Plan panel wants cut in import duty on ethanol

The Planning Commission has suggested a cut in import duty on ethanol from 65 per cent to 7.5 per cent as a substantial amount of the product will have to be imported for the government's petrol blending programme.

Oil marketing companies estimate that 5,00,000 kilolitres of ethanol will be required to make 5 per cent ethanol blended petrol available across the country. India has an installed capacity to produce 1,300 million litres of ethanol, a by-product of sugar production.

The petroleum ministry has said ethanol-blended petrol will be available across India from November 1 to help the country reduce its dependence on imports. Initially, a 5 per cent blend will be allowed, and then increased to 10 per cent by October 2007.

Meanwhile, Petroleum Minister Murli Deora has said the programme will not be mandatory but subject to availability of ethanol. "OMCs have been given complete freedom to protect their commercial interests in arriving at workable ethanol pricing," the ministry has said.

Planning Commission member Kirit Parikh said the commission had never been in favour of having a mandatory ethanol blending programme.

The process of procurement of ethanol by oil marketing companies through competitive bidding has already commenced.

The oil marketing companies have begun issuing public notices for procurement of indigenous anhydrous ethanol in different states.