Feedstock Tax Barrier Removed by India Government Allowing Rapid Expansion of Biodiesel

(Aemetis) Aemetis, Inc. (NASDAQ: AMTX), an advanced renewable fuels and biochemicals company, announced that the Government of India Revenue Department removed an important tax barrier to expanding biodiesel production in India, issuing an exemption on excise tax for feedstock. Biodiesel is a non-excise product, but a 12.5% tax had been charged on all feedstock and other inputs. The removal of the "inverted excise tax" enables rapid expansion of biodiesel production in India using both domestic and imported feedstock.

Prime Minister Modi has demonstrated visionary leadership by taking three major steps to advance the biodiesel industry in India. In October 2014, about $10 billion of annual subsidies for petroleum diesel was ended. In August 2015, biodiesel manufacturers were allowed to directly sell biodiesel to bulk customers, bypassing the government-owned oil marketing companies (OMCs) who control the retail outlets throughout India. In October 2015, the excise duty on the raw materials used in producing biodiesel was eliminated.

"With this prohibitive tax barrier to purchasing feedstock and other components removed, we believe Aemetis can, through our Indian subsidiary Universal Biofuels Private Ltd. (UBPL), achieve full production of biodiesel capacity in 2016," said Eric McAfee, Chairman and Chief Executive Officer of Aemetis. "This supportive tax policy for biodiesel shows the commitment of PM Modi to cleaner air, lower carbon emissions, increased foreign investment, expanded skilled jobs and decreased diesel imports." About 80% of the petroleum diesel consumed in India is imported.

"With the key tax notification now in place, we believe the entire biodiesel industry in India will benefit. As a market leader in India, UBPL will move aggressively to source feedstocks from different suppliers in India and across the globe to achieve our revenue and profitability goals," said Sanjeev Gupta, Managing Director, Universal Biofuels subsidiary of Aemetis, based in Hyderabad.

The India diesel market is currently estimated at about 25 billion gallons per year (BGY), which upon achievement of a 20% biodiesel blend would result in a biodiesel market of about 5 BGY. The current biodiesel production capacity in India is estimated at 250 million gallons per year (MGY). Aemetis owns and operates a biodiesel production facility with a capacity of approximately 50 MGY (190 million liters) per year near the port city of Kakinada, located on the East Coast of India, and plans expansion to 100 million gallons per year. READ MORE