GST: Higher rates on biodiesel may hurt Modi's clean energy plans

Industry players contend the 18% tax under the new regime will make the green fuel uncompetitive

The biodiesel industry feels the recently announced goods and services tax will make it costlier than diesel and uncompetitive as a clean energy fuel.  

In the GST rates announced recently, biodiesel, ethanol and other mixing products will be taxed at 18 per cent. 

Biodiesel has attracted zero excise duty for the past 10 years and producing states like West Bengal, Uttar Pradesh, Uttarakhand, Chhattisgarh and Rajasthan charge zero value-added tax (VAT) on it.

The petroleum ministry is planning 5 per cent biodiesel blending by 2022. With this, the industry was expected to face annual demand of 6.75 billion litres,