Ethanol is more expensive for oil companies to purchase even at Rs. 21 per liter when the price of petrol is over Rs. 50, Bio diesel is more expensive to purchase above Rs. 25 when the price of diesel is around Rs. 35 to 39 per liter. This is because of taxation.We loose foreign exchange - never mind, we pay interest on borrowing through our nose – never mind, by not promoting bio diesel and ethanol we are creating problem for our agriculture growers – never mind. This is because we are not able to see the problem as a system. The ethanol has lower tax, Bio diesel has lower tax but the moment these are added in Petrol or diesel the companies have to pay very high taxes and that is the end of story.The Employment scheme, Helping sugar industries, helping Jatropha growers and all good slogans come to an end the moment it comes to taxation.

Birlas learned before independence, Ambanies learned after independence, large number of industrialists and traders have learned on the process of survival that how government thinks to solve a problem. Let the agriculturists and farmers also learn. Faster the better. By Example, usually govt. has no opinion of its own. Whatever from the environment looks sensible, acceptable and makes economic sense is the view of the government.There are professionals and business houses have been trying to convince government that the sales tax in bio diesel should not be that of petro diesel. This is making the product unviable in two counts number one the VAT is not recoverable in petrol and diesel and secondly the price of product without VAT makes the production of bio diesel or Ethanol unviable.

There is information that the government is considering a host of tax incentives to promote the use of bio-diesel. The Petroleum ministry has approached the finance ministry with a proposal seeking waiver of excise duties on the product. The ministry’s proposal also includes exemption of VAT (sales tax) to make the green fuel commercially viable.The market price of bio-diesel ranges between Rs 35 per litre and Rs 52 per litre which is higher than the price of regular diesel. The petroleum ministry has sought tax waivers to bring down the retail price and make it affordable. The bio-diesel purchase policy enforced by the government in October ’05, the delivered price of bio-diesel at 20 identified locations in the country was to be Rs 25 per litre inclusive of taxes and duties. This target has not been achieved.

Oil Marketing Companies (OMCs) have recorded insignificant bio-diesel produce because of low production of non-edible oil seeds like Jathropa and Karanja and due to the unavailability of bio-diesel at any of the identified locations. As a result of this, processors who are setting up production facilities of small, medium or large scale are seeking higher prices of the fuel.The government fears that exemption of taxes may not be the sole solution to meet the proposed price. Since the plantations of non edible seeds on a large scale have been taken up only very recently, more effort is required to increase the produce. Due to failure of the policy and inadequacy of bio-fuel production, the petroleum ministry has suggested that the Planning Commission and ministries of finance, rural development, non renewable energy sources, petroleum and natural gas, work collectively to achieve greater use of the eco-friendly fuel.

Sale of ethanol-blended petrol will become mandatory for oil marketing companies (OMCs) only if there is sufficient availability of this alternative fuel at an acceptable price, the Petroleum Secretary, Mr M.S. Srinivasan, said.The Government had earlier wanted to mandate OMCs to sell ethanol-blended petrol in all States — except those in the northeastern region  from October 1 this year."But this ‘mandatory’ is subject to availability," Mr Srinivasan said.The Government is in talks with ethanol manufacturers and a decision on this matter will be taken in the next 30 days when OMCs will contract for the commodity, he said. Once availability is ensured at a price acceptable to both ethanol manufacturers and oil marketing companies, ethanol-blended petrol can be made mandatory, he added.

There is a three-stage process drawn up by the Government leading to a final 10 per cent ethanol-blended petrol. This starts with a 5 per cent blend in nine States, moves to a 5 per cent blend in all States and settles at a 10 per cent blend in all States.At the first stage, the requirement would be 0.4 million kilolitres, at the second 0.6 million kilolitres and finally 1.1 million kilolitres. This is a huge quantity, said Mr Srinivasan. Unless the Government is satisfied that this is going to be available and gets an assurance on this from the manufacturers, ethanol-blended petrol cannot be made mandatory.

Till the issue is decided on how to survive with bio diesel, the farmers will remain be at a cross road. Govt. is offering land for cultivation of Jatropha so everyone interested in the subject are going for allotment of land. What crop or use these land will be put to use can be decided afterwards. Secondly there is incentives provided by state governments towards plantation of Jatropha. Go for it in full swing, take the subsidy and do the plantation, the cost will be covered for sure. When it comes to selling the seeds there is alternate of export is available at almost 3 times the domestic price.At the end, the issue remains, what is the first egg or tyhe chicken ? The government will set right the taxation issues to make the product available or would they like first to have product before getting in to ethanol or bio diesel use in petrol and diesel.

The answer may be obvious to you but remember it will take sometime, setting up of few committee of experts and then if god willing govt. will take the suitable decision to encourage the use of bio diesel in India.We must learn from international experience where the government has given incentive in terms of tax rebates, capital goods incentives, easy loan for setting up of plants, plantation etc. Some of the countries are using from 20% to 85% of bio diesel along with petro diesel. We are still struggling to implement 5% addition of bio diesel.