Natural gas should come under GST regime, says GAIL chairman Sandeep Kumar Gupta

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The government will need to make bold policy interventions if the country is to achieve its goal of more than doubling the share of natural gas in the energy mix to 15% by 2030, said GAIL chairman Sandeep Kumar Gupta. In an interview to ET’s Sanjeev Choudhary, the former finance chief of Indian Oil Corporation, who took over as the chief of India’s largest gas marketer and transporter in 2022, said the government should mandate the use of natural gas in refineries and steel making, and make emissions a factor in the merit order for electricity despatch to help gas-based power compete with coal-based supply. He also said natural gas should come under the goods and services tax (GST) regime, production-linked incentive (PLI) should be extended to LNG-powered vehicles and GST on CNG-powered vehicles should be slashed to 5% from 28%, on a par with electric vehicles (EVs).

What can be done to boost gas demand?

Some policy interventions would be needed if we are to meet our goal of 15% gas in the domestic energy mix by 2030. Gas must be brought under GST, which will solve the problem of stranded input credit claims. The absence of input credit makes gas more expensive than competing liquid fuels. The gas should attract no more than 5% GST.

The 14% central excise duty on compression should go away as it is not a manufacturing activity. If we get tax relief, we can reduce CNG prices or offer incentives to drivers to convert to CNG.