The Hindu Business Line : `Bio-fuels must be given tax sops'

POINTING out the need to have bio-fuel alternatives for fossil fuels, the Planning Commission Deputy Chairman, Dr Montek Singh Ahluwalia, on Thursday favoured giving tax incentives to make bio-fuels economically feasible.

"If bio-fuels have the same tax as petrol and diesel, they will not be economically viable," he said while speaking at an international conference on bio-fuels organised by non-profit organisation Winrock International Ltd.

"As is evident from the experience of some countries, bio-fuels have enough external benefits such as generating employment and income in the rural areas and emitting less green house gases, among others, all of which make it worthwhile for the Government to encourage bio-fuels by providing tax benefits," he added.

The tax incentives need not be in the form of cash subsidy as is the case of kerosene, which the country imports, he added. India's estimated 50-100 million hectares of wasteland, degraded forestland and such can be used for large-scale bio-fuel plantations such as Jatropha curcas, thereby generating employment in the rural areas.

Yield per hectare for bio-fuel plantation is 30-40 per cent, which can safely go to 50 per cent if the right kind of technology is in place, he said.

An investment of Rs 30,000 per hectare is needed for plantation of bio-fuel plants, which would generate an income of Rs 20,000 after a gap of three years for the next 50 years.

"At present, India is not doing enough in the field of renewable energy compared to other fuel import-dependent countries," he said.

"The Planning Commission is already working on finalising a National Energy Policy report which is expected to be finalised by this December," he said on the sidelines of the conference.

The policy would also take into account renewable energy sources along with conventional sources.

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