New Delhi, Mar 6 (KNN) The Indian government is contemplating a request to reduce taxes on flex-fuel vehicles, a step that could hasten the transition to cleaner transportation.

According to sources familiar with the matter, discussions are underway between the Ministry of Heavy Industries, the Ministry of Road Transport and Highways, and various stakeholders to potentially rationalise the Goods and Services Tax (GST) on flex-fuel vehicles.

Following these discussions, a formal proposal is expected to be submitted to the GST Council for approval.

Flex-fuel vehicles, which are capable of running on multiple fuels such as biofuels or conventional fuels, are being encouraged as part of the government's efforts to promote cleaner fuels and decrease reliance on oil imports.

Currently, flex-fuel vehicles are subject to a GST rate of 28 per cent, similar to conventional internal combustion engine-based vehicles, while electric vehicles enjoy a lower levy of 5 per cent. Industry representatives have called for parity in tax rates between flex-fuel and electric vehicles.

In December 2021, the government urged automakers to start producing flex-fuel vehicles in compliance with BS-6 norms. However, the adoption of these vehicles has been slow.

To boost their uptake, the government has included automobile and auto components for flex-fuel engines in its Production-Linked Incentives (PLI) scheme.

Meanwhile, the government aims to increase the ethanol blending percentage in petrol from the current 10 per cent to 20 per cent by 2025, necessitating a wider availability of flex-fuel vehicles.

This initiative aligns with the government's broader focus on promoting cleaner fuels and reducing carbon emissions, particularly in light of its ambitious net-zero target for 2070.

(KNN Bureau)