Auto LPG Industry Appeals For Policy Support & Tax Concessions From Government

With the COVID 19 crisis grounding most vehicles including three-wheelers, Auto LPG sales have witnessed a sharp decline over the past two months. Faced with serious challenges, the Autogas industry is seeking urgent policy help from the government to be able to support itself post the lockdown.

According to apex industry body Indian Auto LPG Coalition (IAC), sales volumes have been affected by more than 90% due to the country-wide lockdown and the comprehensive traffic restrictions. The demand from three-wheeler segment which is among the largest consumers of Auto LPG has been almost zero since public transport has been strictly off roads.

Unfortunately, even after the lockdown is lifted, it would take several months for public transportation to return to normalcy due to social distancing requirements. The sector is therefore staring at a long period of economic slump and suppressed demand. Long term fiscal and non fiscal policy incentives from the government are needed to revive the industry quickly.

“The oil and gas sector has been hit hard due to decline in demand from vehicular traffic. However, the Auto LPG sector has been hit the hardest because the major consumers of this clean fuel in the country are commercial vehicles and three wheelers which are not plying. The industry needs help from the government through a series of fiscal and non–fiscal policy interventions to survive this difficult period. We particularly request that Corporate Tax on Auto LPG operators and station owners be reduced to 15% for FY 2020-21 and a 6-month tax holiday is provided for new retail outlets to be commissioned during FY 2020-21,” said Suyash Gupta, Director General, Indian Auto LPG Coalition.

While the demand for petrol and diesel is expected to pick up again once restrictions are lifted, the Auto LPG association expects the curve to be longer because three-wheeler usage is likely to remain low on account of social distancing norms.

Currently, there are over 1400 Auto LPG Dispensing Stations (ALDS) in the country that provide direct employment of over a thousand people and an indirect financial support to many others. With the nationwide lockdown resulting in the stoppage of all transport vehicles across the spectrum of transport, the operators and franchisees of the ALDS stations are bearing the costs of salaries, rentals and other overheads on almost zero revenues.

Apart from direct tax concessions, IAC also reiterated the urgent need to tax Auto LPG at 5% GST on the same rate as domestic LPG. This move should help in reduction of price to the customer and reduce pilferages in the system. Notably, auto LPG accounts for less than 2% of the overall LPG sales in the country.

It is also necessary that the GST on Auto LPG conversion kits is reduced from the exorbitant 28% to 5%. This will help in encouraging personal vehicle owners to convert to the eco-friendly fuel.

“Even as the government plans major long term expenditure on rolling out Electric Vehicles, it must not ignore the low hanging fruit that is Auto LPG. We have for long been underlining the need to promote its usage for its significant environmental benefits. Unlike EVs, Auto LPG doesn’t need any subsidy or infrastructural investments to be deployed. All it needs is a level playing field and reasonable incentives such as low GST rates, with almost negligible impact on government exchequer,” stated Gupta.