The Hindu Business Line : Bio-diesel unlikely to make headway despite Budget sops

Mumbai, July 9 The Budget has had some sops for bio-diesel in terms of complete excise duty exemption for petro-diesel, which is blended with bio-diesel and a slash in Customs duty from 7.5 per cent to 2.5 per cent on its imports.

However, in the absence of a clear roadmap for implementation, the Government’s attempt to popularise the use of bio-diesel may not bear fruit, according to automobile manufacturers and bio-diesel producers in the country.

“The Budget announcements should make bio-diesel blending more attractive but implementation is a big question,” said Mr Dilip Chenoy, Director General, Society of Indian Automobile Manufacturers (SIAM).

Priority list

From the viewpoint of automakers and bio-diesel producers, there is again a divergence in their priority list. The former prefer that it be available across the country while bio-diesel producers want auto makers to recommend customers the use of bio-diesel in their vehicles so that they can expand production and dispensing network accordingly.

“Vehicle manufacturers typically specify the type of fuel and lubricant to be used in their engines to maximise performance and warranty. Most engines in India do not recommend bio-diesel blended fuel up to 20 per cent blend. This will hamper the Government’s objective to popularise its use. Engine manufacturers, oil marketing companies and other related agencies need to resolve this issue,” said Mr Sandeep Chaturvedi, President, Biodiesel Association of India (BAI).

“We have always been open to the use of bio-diesel. There is no technological issue as far as vehicle manufacturers are concerned. However, we would like to start with five per cent blend and this should be available on a sustainable basis across the country,” said Mr K.K. Gandhi, Executive Director (Technical), SIAM.

Availability

Availability of bio-diesel is a bigger issue. According to Mr Chaturvedi, of the 1.2 million tonnes installed processing capacity in the country, only five per cent is used.

An estimated 55 million hectares of wasteland are available to cultivate jatropha, the main crop from which biodiesel is extracted. However, only a little over one-tenth of this land is being used.

Companies such as Tata Motors, Mercedes-Benz and Mahindra & Mahindra have tested bio-diesel in their vehicles. “Our vehicles have run over one lakh kilometres on bio-diesel,” said Mr Suhas Kadlaskar, Director, Corporate Affairs, Mercedes-Benz.

Tata Motors and IndianOil started the use of bio-diesel blended high speed diesel (HSD) on 43 buses in Pune in 2005. Mahindra & Mahindra also has had trials of bio-diesel run sport-utility vehicles and tractors. Nearly 2,000 vehicles, mainly buses and trucks, operate on bio-diesel blended diesel in India.

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