Auto LPG body wants GST rates to be lowered to 5%

At present, a rate of 18% has been set for commercial LPG; before GST rate was 23%

Though lower goods and services tax (GST) rates have boosted sales of auto LPG, the industry bodies want the fuel to be taxed at 5 percent, at par with compressed natural gas (CNG).

According to Indian Auto LPG Coalition, a lower GST slab may result in a reduction of auto LPG prices by about 10 per cent compared to CNG.

At present, a rate of 18 per cent has been set for commercial liquefied petroleum gas, which is used as a low-emission auto fuel. Earlier, the rates used to be 23 per cent, there by resulting in a drop in prices post GST. 

“We have requested both the GST Council and the ministry of petroleum to reduce the rates on auto LPG at par with CNG, in order to push green energy.  In that case, it will become at least 10 per cent cheaper than CNG,” Suyash Gupta, director general of the Indian Auto LPG Coalition, told Business Standard.

Auto LPG is the third-most commonly used automotive fuel in the world, after petrol and diesel. Over 26 million vehicles across 70 countries use auto LPG. 

Also, seven of the 10 largest car manufacturers produce LPG powered cars. “Compared to CNG also, auto LPG is greener as it has far lower nitrogen oxide emissions. We need a better policy ecosystem to promote this fuel. Auto LPG needs further push in India as the fuel is the third largest auto fuel in the world covering about 26 million vehicles across the globe, while CNG is only the fourth largest,” Gupta added.

The sales volume of auto LPG zoomed 16 per cent in the period between October 1, 2016, and December 31, 2016. Meanwhile, sales figures for May increased by 12 per cent over April 2017. 

With a volume of more than 34,000 metric tonnes (MT) in May, auto LPG also achieved one of its highest ever monthly sales ever since the fuel was introduced in the country. The sector clocked 34,259 MT in May as against 30,576 MT in April 2017.

Apart from the price reduction, another major contributor to the growth in sales volume has been the increased accessibility of the fuel, with close to 1,100 stations across 500 cities and towns. 

The sector received a  boost in October 2016 when auto LPG prices were slashed by leading government oil companies such as Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation, making the fuel about 50 per cent cheaper than petrol.