Feedstock tax barrier removed by India Government allowing rapid expansion of biodiesel
October 26, 2015 - Aemetis, Inc., 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 per cent 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 CEO 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 per cent 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, a 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 per cent 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 litres) per year near the port city of Kakinada, located on the East Coast of India, and plans expansion to 100 million gallons per year.
Headquartered in Cupertino, California, Aemetis is an advanced renewable fuels and renewable chemicals company focused on the acquisition, development and commercialization of innovative technologies that replace traditional petroleum-based products by the conversion of first-generation ethanol and biodiesel plants into advanced biorefineries. Founded in 2006, Aemetis owns and operates a 60 million gallon per year ethanol production facility in the California Central Valley town of Keyes. Aemetis also owns and operates a 50 million gallon per year renewable chemical and advanced fuel production facility on the East Coast of India, producing high quality distilled biodiesel and refined glycerin for customers in India and Europe. Aemetis operates a research and development laboratory at the Maryland Biotech Center, and holds a portfolio of patents and related technology licenses for the production of renewable fuels and biochemicals. For additional information about Aemetis, please visit www.aemetis.com.
Safe Harbor Statement
This news release contains forward-looking statements, including statements regarding our assumptions, projections, expectations, targets, intentions or beliefs about future events or other statements that are not historical facts. Forward-looking statements in this news release include, without limitation, statements regarding our growth opportunities, our ability to grow and expand our business in India, the size of the market for biodiesel in India, the effect of the elimination of the excise duty on inputs on the biodiesel industry in India, UBPL’s achievement of full production of biodiesel capacity, our plans to source feedstocks and expand our facility in India and achievement of our revenue and profitability goals. Words or phrases such as “anticipates,” “may,” “will,” “should,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “targets,” “will likely result,” “will continue” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on current assumptions and predictions and are subject to numerous risks and uncertainties. Actual results or events could differ materially from those set forth or implied by such forward-looking statements and related assumptions due to certain factors, including, without limitation, competition in the ethanol and other industries in which we operate, commodity market risks including those that may result from current weather conditions, financial market risks, counter-party risks, risks associated with changes to government policy or regulation, and other risks detailed in our reports filed or to be filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2014 and in our subsequent filings with the SEC. We are not obligated, and do not intend, to update any of these forward-looking statements at any time unless an update is required by applicable securities laws.