Ethanol distillation and storage capacity in India should be increased to meet a 10 percent blending target, according to Abinash Verma, director general of Indian Sugar Mills Association (ISMA).
"To meet a demand of 10 percent blending in fuel, we need 266 crore litres of ethanol. For that we have to increase distillation and storage capacities," Verma said on Friday at a workshop on ethanol.
India currently has an ethanol production capacity of 224 crore litres, he said.
He called upon oil marketing companies (OMC) to participate in ethanol storage and asked the government to make ethanol production an area of priority sector lending.
Verma said India's surplus sugar production has become a burden for the industry.
"India is a surplus sugarcane producer for the last five years and is expected to remain so in the next few years too."
Appealing for government support, he called upon the states to give permission to convert molasses into ethanol and make excise duties favourable.
He also called for effective tax and duties and inter-state no-objection certificates (NOC) for shipping and long-distance transport of ethanol.
Tamil Nadu levies the highest Value Added Tax (VAT) of eight percent on inter-state movement of ethanol, followed by Andhra Pradesh and Gujarat with 5.5 percent and Maharashtra with five percent, Verma said.
Talking about the fate of ethanol after if it is kept out of Goods and Services Tax ambit when passed, he said, "GST paid on inputs would become a burden on ethanol producers, it will increase the cost of producing fuel ethanol and states may levy different taxes and duties on fuel ethanol."
"Our request is that a separate category of bio-fuels or renewable energy be created and kept as part of GST."
Verma also sought clarity on the difference of powers between the central and state governments on fuel ethanol.
