Gadkari to announce flexi-fuel vehicle policy next month

To curb pollution, the government will announce a policy next month to allow automakers to manufacture flexible-fuel vehicles in the country, transport minister Nitin Gadkari said on Wednesday.

The minister called upon the sugar industry to ramp up ethanol production as demand for ethanol is likely to go up once flexi-fuel vehicles are introduced in India.

"We are working on a policy on flexi-fuel vehicles. These vehicles can run entirely on ethanol, but also have option for petrol. I will make this announcement before 26 January," Gadkari said at the annual general meeting of the Indian Sugar Mills Association.

Not much research or study is required to finalise the policy as countries like the US and Brazil are already implementing it, he said.

"This will not only cut crude oil imports, but help in addressing the problem of pollution," Gadkari said.

The minister has asked Germany's biggest car maker, Volkswagen, to make flexi-fuel vehicles for India.

"I understand the sugar sector is facing problems. There is no point in manufacturing more sugar. This is the time the sector should focus on increasing ethanol production instead of sugar for survival," he said.

 ISMA director general Abinash Verma said, "This is the future ... the ethanol producing industry will react once there is demand. It is not a problem for automakers to make flexi-fuel cars for India. But there has to be a policy, demand and infrastructure to supply 100 per cent ethanol for blending with petrol."

Last year, the country achieved 2.5 per cent ethanol blending with petrol. "We supplied 66 crore litres of ethanol last year. This year, we expect to achieve 5 per cent ethanol blending. We have already contracted for 104 crore litres," he said.

Positive about introducing the flexi-fuel vehicles policy in India, Gadkari said, "I have told automobile makers that it will be good if they come on board with us on the issue. Even if they don't, then we will make efforts to bring them on board. This will happen for sure."

On the purported lack of focus by the petroleum ministry on biofuels, he said, "The petroleum ministry is not keen on biofuels I don't want to say more than this. But we will take everyone along with us."

"To increase ethanol blending to the 100 per cent level, sugar mills need to raise production capacity from the current level," Gadkari said.

Currently, 130 out of 500 sugar mills are manufacturing ethanol in India. There is a need to convert all mills towards ethanol production, he stressed.

"The more you produce sugar, the more your problems will aggravate. This is not the time to focus on sugar. Produce sugar when prices are high. Now, focus on ethanol for the next 4-5 years," he said.

 New technologies should be adopted to manufacture ethanol from sugarbeat, sweet sorghum and corn, he suggested.

Gadkari also made it clear that there were no immediate solutions for the government to offer the sugar industry despite being fully aware of the problems.

Outlining the hurdles in boosting ethanol supplies, ISMA president A Vellayan said, "Most impediments are because of controls exercised by states. Some of the state governments levy export and import duties on inter-state movement of ethanol, which in some cases are up to even 8 per cent of the final price realisation."

Since the fixed price for ethanol includes taxes and duties on account of suppliers, the net realisation to suppliers comes down and therefore, discourages them to participate in supplies to these states, he explained while addressing the AGM of ISMA.

That apart, he said, there is a requirement of obtaining excise permissions for moving ethanol from a distillery to oil depots.

"The problem becomes acute when permissions have to be obtained from two states when there is a movement of ethanol between states. The delays in excise permissions sometimes is to the extent of 30-40 days also," he said, adding that there are some states like Tamil Nadu that do not give permission to make ethanol at all.

Highlighting that these issues need to be addressed to boost ethanol supplies, he said ethanol blending this year is expected to be five% this year as against 2.5% in 2014-15 season (October-September).