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• Informist, Wednesday, Jan. 14, 2026

 

MUMBAI – The Indian Sugar and Bio-energy Manufacturers Association has urged the government to undertake comprehensive rationalisation of goods and services tax and targeted policy support across the biofuel and clean mobility ecosystem ahead of the Union Budget 2026–27 (Apr-Mar). Such reforms could deliver rapid emission reductions, safeguard farmer livelihoods, reduce crude oil imports, and accelerate India's pathway to net zero, it said.

 

ISMA has recommended reducing GST on flxi fuel vehicles. For flexi fuel two-wheelers and small cars, it has recomended reduction from 18% to 5% to achieve cost parity with conventional petrol vehicles. The association has also asked for aligning duties on hybrid electric vehicles and related components with electric vehicles. "ISMA has also proposed targeted government procurement and fleet adoption of FFVs (flex-fuel vehicles), along with demand-side incentives similar to FAME II to reduce acquisition costs and accelerate consumer adoption," it said.

 

With ethanol recognised as a carbon-neutral fuel, ISMA has urged reduction of GST on E85 and E100 from 18% to 5% to ensure pump prices remain competitive with petrol while compensating for mileage differentials. Notifying distilleries as dispensing entities will also strengthen last-mile availability.

 

To accelerate sectoral growth, ISMA has proposed lowering GST on ethanol-related equipment from 18–28% to 5%, following the successful model adopted during India's early solar expansion. It has also urged to diversify ethanol utilisation beyond the E20 ceiling. The trade body has sought a INR 2 billion fund to conduct technical validation and commercial-scale trials for isobutanol blending with diesel—critical for decarbonising freight, rail and other diesel-dependent sectors.

 

The association has also proposed the establishment of a Bharat Biofuels Alliance — an India-focused platform aligned with the Global Biofuels Alliance — to drive innovation, research, policy development and collaboration across the biofuels value chain. It has also offered to host the secretariat for this effort.

 

It has also recommended an INR 10-billion support fund to convert sugar mills into integrated bio-energy hubs producing first-generation and second geberation ethanol, compressed biogas, sustainable aviation fuels, bio-hydrogen, green electricity and bio-based products, positioning rural India as a clean energy powerhouse. "To support India's aviation decarbonisation targets, ISMA has called for a National Sustainable Aviation Fuel (SAF) Policy with a 10,000 crore (INR 100 billion) fund, GST reduction on SAF to nil, and lower import duties on critical enzymes. It has also recommended a long-term pricing formula for 2G ethanol to secure investment viability," it said.

 

ISMA has urged lowering GST on ethanol cookstoves and extending subsidies to low-income households, given their potential to reduce indoor pollution, cut liqified petroleum gas imports and provide a clean, affordable cooking solution for millions. The association has recommended capital support for compressed biogas facilities, simplefied environmental clearences and a premium prices stucture delinked from CNG to reflect its environmental benefits.

 

Lastly, the association has proposed an INR 15-billion viability gap fund to establish 10 green bio-hydrogen production centres within sugar refineries, along with forward pricing mechanisms to ensure long-term offtake and reduce dependence on grey hydrogen, according to the release.  End

 

Reported by Taniva Singha Roy

Edited by Avishek Dutta

 

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