Government’s ‘Green Tax’ must be supplemented by incentives to switch to clean fuels: Indian Auto LPG Coalition

New Delhi, 10th May 2021: With the Government imposing a Green Tax on old polluting vehicles, India’s Auto LPG sector is advocating the need for this deterrent to be accompanied by incentives to people shifting to cleaner alternative fuels such as Auto LPG.

The Union Ministry for Road Transport and Highways recently approved a proposal to levy a ‘green tax’ on old vehicles in a bid to curtail pollution and push consumers to switch to environmental-friendly alternatives. Notably, hybrid vehicles and vehicles running on clean alternative fuels such as LPG, CNG and ethanol will be exempt from this tax. The initiative aims to make polluters pay for environmental pollution in India’s choking cities.

While welcoming the move as a step in the right direction, Indian Auto LPG Coalition has suggested that penalisation for polluters be accompanied by reward for users of clean fuels.

“The decision to impose a tax on people using old and polluting vehicles is a highly welcome step as it seeks to penalise the polluters. The move will motivate and push consumers to switch to cleaner alternatives like Auto LPG that can help bring about a significant improvement in air quality. India’s choking cities need to shift a large number of their private vehicles to clean alternative fuels immediately and pushing consumers to switch their existing vehicles to clean alternatives is the quickest way to achieve this. This is why a penalty for polluters must also be accompanied by reward or incentives for citizens switching to clean fuels to make it more impactful,” said Mr Suyash Gupta, Director General, Indian Auto LPG Coalition.

Petrol/diesel vehicles including cars, two-wheelers and three wheelers can easily be converted to Auto LPG or CNG by installing conversion kits. Conversion kits that currently cost up to Rs 25,000 can be made significantly more affordable with GST cuts and subsidy support.

Notably, these conversion kits are taxed at a prohibitive GST rate of 28%, a policy that is dichotomous to the government’s commitment to clean energy.

“Rationalising this prohibitive GST rate on conversion kits to 5% has been a long-pending plea of the Auto LPG sector. Reducing this GST rate will make conversion kits more affordable for mass usage. The government must also consider subsidizing conversion kits for consumers as a move towards incentivizing personal vehicle users to shift to clean gaseous fuels at a mass level. The Green tax on polluting vehicles together with incentives for consumers shifting to clean fuels can have a quick and remarkable effect on India’s urban air quality,”added Mr Gupta.

Auto LPG is the world’s third most widely used automotive fuel which emits almost 50% lesser PM emissions as compared to petrol and up to 80% lesser than diesel. Vehicles using Auto LPG as fuel also emits much lower CO2, making Auto LPG one of the most eco-friendly fuels available today. The Government must also include Auto LPG under the ambit of the city gas distribution project.

Under the green tax being levied by the Ministry for Road Transport and Highways, personal vehicles will be charged with green tax at the time of renewal of registration certification after 15 years. Also, a higher tax of up to 50% of road tax has been proposed for vehicles being registered in highly polluted cities.