In order to encourage EVs, the industry has petitioned the Ministry of Petroleum and Natural Gas to lower the GST for LNG cars from 28 to 5 percent.
LNG Sector Seeks Relief
The industry has made many demands, including reducing the Goods and Services Tax (GST) on LNG vehicles, stabilizing pricing, and increasing distribution, in response to the Indian government’s desire to accelerate the use of LNG as a transportation fuel.
People with knowledge of the situation informed Moneycontrol that the LNG business has pushed the Ministry of Petroleum and Natural Gas (MoPNG) to lower the tax on LNG cars, similar to how EVs are subject to a 5 percent GST.
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The hefty initial capital expenditure is now the constraint. When choosing between LNG and diesel trucks, truck operators consider the return, according to a representative of a gas distribution business.
Trucking Sector Eyes LNG
The Indian government intends to have a third of the nation’s eight million long-haul trucks run on LNG over the next five to seven years in order to accelerate the transition away from fossil fuels. The government wants to build 1,000 LNG plants nationwide by 2030.
The business has also requested a domestic pricing mechanism from the government to control LNG prices and partly distribute cheaper administered price mechanism (APM) gas to the industry. Currently, LNG costs are based on global gas prices since India imports around half of its needs.
“They (truck drivers) require price assurance.” Another executive from a state-run gas business said, “If they switch to LNG and prices suddenly soar in the global market, they would suffer a significant loss.”
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LNG Expansion Gains Traction
LNG trucks are being offered in India by major manufacturers such as Tata Motors, Ashok Leyland, and Blue Energy. Simultaneously, energy companies like GAIL and Indian Oil are working on developing the supporting infrastructure needed to facilitate the use of these vehicles. Only 20 LNG retail locations exist throughout the nation at the moment.
With the goal of gaining 50% of the market, state-owned GAIL pledged Rs 650 crore in 2024 to build LNG stations throughout the Golden Quadrilateral, important national roads, and mining centers. Additionally, LNG stations are being set up by Bharat Petroleum, Hindustan Petroleum, and Indian Oil to support the growing use of LNG trucks.
According to rating agency Crisil Intelligence, the heavy-duty vehicle (HDV) category uses 35–40 billion liters of diesel per year, or 40–45 percent of the nation’s overall diesel use.
Policy, Cost Hinder Adoption
Sehul Bhatt, Director-Research at Crisil Intelligence, mentioned that even though LNG trucks initially cost 25–35 percent more than conventional trucks, the fuel price of LNG, at ₹50–60 per kilogram, remains affordable, is much lower than Rs 85–95 per liter for diesel, improving the cost of operation.
“On the other hand, the lack of unified policy measures to encourage LNG usage in commercial fleets and the limited presence of original equipment manufacturers (OEMs) limit uptake,” Bhatt said.
Due to a lack of regulatory intervention and infrastructural deficiencies, the expansion has remained relatively moderate despite the government’s ambitious aim for the use of LNG in the transportation sector.
Public-Private Partnerships Boost LNG
The LNG-powered HDV sector might reach scale via public-private partnership models to de-risk early investments, transport corridor-led infrastructure development with viability gap finance, and aggregated demand assurance through pooled fleet procurement platforms, Bhatt said.
By 2030, India wants to raise the proportion of natural gas in its overall energy basket from the current 6-7 percent to 30%.