Energy Budget 2017: Focus on making India ‘Gas-based economy’, Custom duty on LNG halved to 2.5 per cent

This move also seems to be in line with the Government's intention to increase the annual LNG import capacity to more than double in the coming years.

Edited By: Uddipta Das

Published: February 1, 2017, 4:08 PM IST

Share

Share Article

• Facebook
• WhatsApp
• X
• Email
• Telegram
• Linkedin

https://www.india.com/news/india/energy-budget-2017-focus-on-making-india-gas-based-economy-custom-duty-on-lng-halved-to-2-5-per-cent-1801648/ Copy

File Image: A fertiliser plant, one of the primary consumers of LNG

New Delhi, Feb 1: To encourage gas imports in the country, Finance  Minister Arun Jaitley announced in the Union Budget of 2017-18 that custom duty on Liquefied Natural Gas (LNG) has been reduced to 2.5 per cent from the earlier 5 per cent at terminals. This move is part of the Government’s strategy to make India a “gas-based economy”.

According to Finance Minister Arun Jaitley, this measure to cut the duty to make gas imports cheaper is an attempt to encourage the LNG consumers to increase the usage of the gas product. Notably, majority of the users of LNG are power and fertiliser companies. As there seems to be a considerable drop in domestic production of these companies, the announcement of the FM in the Union Budget 2017-18 might come as a blessing.

This move also seems to be in line with the Government’s intention to increase the annual LNG import capacity to more than double, that is 50 million tonnes in the coming years. According to The Economic Times, India’s natural gas demand is reportedly expected to rise from present 473 million standard cubic meter per day (mmscmd) to 494 mmscmd in 2017-18 and 523 mmscmd in 2018-19.

The Government seems to have taken steps to incentivise domestic value addition under the Make in India initiative and hence reduce the customs and excise duties on several items related to the renewable energy sector. Apart from just LNG, according to Press Information Bureau, reduction in Customs and Excise Duties are also applicable on all items of machinery required for fuel based power generating system to be set up in the country for demonstration purposes and systems which operate on biogas or bio-methane or by-product Hydrogen along with LED lights or fixtures etc.