Slash GST on auto LPG, address policy issues stalling growth: Indian Auto LPG Coalition

Industry body Indian Auto LPG Coalition on Tuesday sought reduction of Goods and Services Tax (GST) on auto liquefied petroleum gas (LPG) as well as on conversion kits for gaseous fuels as part of measures to promote the adoption of clean automotive fuels.

It said auto LPG is among the cleanest alternative fuels with a global warming potential of 'zero' and currently taxed at a high GST slab of 18 per cent.

On the other hand, the GST rates on auto LPG and CNG conversion kits stand at 28 per cent. Ahead of the Union Budget 2020, the coalition said high GST rates on clean fuels and conversions kits are in complete variance to the government's stated green mobility push.

"We seek the attention of Finance Minister Nirmala Sitharaman towards the imminent need for devising friendly policies to allow rapid growth of environment-friendly transport fuels like auto LPG," said Suyash Gupta, Director General of Indian Auto LPG Coalition.

He said LPG is the most widely used alternative fuel in the world with a proven track record of improvement in air quality. The global consumption of auto LPG has risen by over 40 per cent over the past 10 years, fuelled by environmental concerns.

Among the key nations that have successfully adopted this green fuel for their transportation requirements are South Korea, Turkey, Poland, Japan, Australia, Italy, Mexico and Russia.

Gupta said investing in a wider basket of clean alternative transport fuels that are more readily available can bring about an immediate improvement in air quality, unlike electric vehicles that are still a decade away from becoming commercially viable.

Apart from the need to lower GST, another critical intervention required is the reform of the type approval norms governing conversion to gaseous fuels. The type approval norms require companies to renew extremely cost-prohibitive type approvals for auto LPG and CNG conversions every three years.

"This acts as a major hurdle to the industry and has resulted in a rapid dwindling of players in the retro-fitment market," said Gupta. The type approval regime must be made industry-friendly and its validity must be made perpetual in line with European norms."

More than 26 million vehicles run on auto LPG globally, supported by close to 71,000 LPG filling stations with global auto LPG consumption exceeding 26 million tonnes. Emissions of harmful nitrogen oxides (NOx) and harmful particulate matter 2.5 are almost negligible for auto LPG.

The members of Indian Auto LPG Coalition include oil sector public sector undertakings, private auto LPG marketers, kit suppliers and equipment manufacturers. The coalition works closely with World LPG Association, Society of Indian Automobile Manufacturers (SIAM) and Automotive Research Association of India (ARAI).

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