Volvo, Volkswagen ready to supply flex-fuel vehicles: Gadkari

New Delhi: Keen to promote transportation on alternative fuel like methanol and ethanol, Union Minister Nitin Gadkari today said automobile giants Volkswagen and Volvo have shown interest in supplying such vehicles to be run on a pilot basis in the country.

"We had a talk with Volvo...They are ready to supply 50 buses on methanol in Pune and Mumbai," Road Transport, Highways and Shipping Minister Gadkari said.

Gadkari said the project will be on a pilot basis initially, and could be replicated as there was immense potential for running vehicles on alternative fuel like methanol, ethanol and Bio CNG.

The minister said that talks were on with taxi aggregator Ola for running taxis on ethanol.

"Volkswagen is ready to supply flex engine for 100 vehicles if ethanol supply is ensured," he said.

Like flex engine in the US, Brazil or Canada, which can run either on 100 percent petrol or fuel blended with 22 percent ethanol, taxis here too can be operated on a pilot basis, he said.

Last month Nagpur, the constituency of Gadkari, had earned the distinction of becoming the country's first city with a fleet of 200 electric vehicles, including taxis, buses, e-rickshaw and autos.

The minister had launched the pilot project for 200 electric vehicles, including 100 of Mahindra's new e20 plus to be run by Ola.

Gadkari said that alternative fuel had huge potential and can cut on huge Rs 7 lakh crore import bill on crude.

He said ethanol could be produced in large quantities in Uttar Pradesh and Bihar, and taxis running on it could save Rs 4.5 per km on fuel charges.

The minister said, in Stockholm 400 buses were running on ethanol which can be easily produced in India, while Gujarat State Fertiliser Corporation could produce methanol, which is produced from coal gasification.

"In fact we are thinking to promote alternative fuel in shipping sector as well and vessels could be run on methanol which is cheaper than LNG," he said, adding 500 barges were brought for Ganga which could be run on these if all goes well.

Last month, Gadkari had said he will urge Finance Minister Arun Jaitley to bring down GST rate on hybrid vehicles and other automobiles that run on alternate fuels.

Under the GST rates, hybrid cars, which are considered eco-friendly, are slated to attract a 15 percent cess over and above peak rate of 28 percent, same as those of large luxury cars and SUVs.

The automobile industry has expressed concern on the high rate on hybrids stating it would put a spanner in the wheels of government plans to promote green vehicles.

At present hybrid vehicles attracts excise duty of 12.5 percent with an effective overall tax rate of 30.3 percent.