New Delhi: The government will need to consider not only reducing the price of high-ethanol blended petrol and pure ethanol but also the cost of flex fuel vehicles (FFVs) that would use this fuel to generate high demand among consumers, experts said. They acknowledged that the current 20% blending has helped India save approximately 4.5 crore barrels of imported crude oil annually.
Government announces E85 price
The government on Friday announced a retail price of Rs 82.12 per litre for 85% ethanol-blended petrol (E85) in Delhi, compared to Rs 102.12 for the current 20% blended fuel. This week, two major automobile companies launched two flex fuel bikes and a car, a move seen as an effort to reduce India's dependence on crude oil imports.
Mileage and cost concerns
Officials involved in preparing the roadmap for FFVs and higher ethanol use said that using 85-100% ethanol as fuel can reduce vehicle mileage by up to 30%. One official stated, "So, you can't expect customers to opt for these vehicles unless the price of high-ethanol blend is reduced proportionately to compensate for less mileage. Second, the price of FFVs will be higher than petrol vehicles as manufacturers make them both fuel and material compliant, and these have more sensors. This also needs to be addressed."
GST parity demand
Last year, Petroleum Minister Hardeep Singh Puri wrote to Finance Minister Nirmala Sitharaman seeking GST parity for FFVs with electric vehicles. Currently, the GST for FFVs is 28% compared to only 5% for EVs. At a meeting called by the petroleum ministry in March last week, vehicle manufacturers flagged the need to address consumer concerns, particularly regarding lower fuel costs and tax incentives to make FFVs affordable. Officials informed the industry that they had taken up the reduction in GST rate on FFVs and ethanol as fuel with the finance ministry.
