CNG demand in India to grow significantly amid focus on electric mobility, reveal multiple studies

Compressed Natural Gas (CNG) has been finding an increasing number of takers in the Indian passenger vehicle market as a key alternate fuel solution. While the focus of the industry players, as well as government and policymakers, remains on electric mobility, the adoption of CNG as a cleaner fuel has also been thriving over the last few years. Now, multiple studies have projected that the growth of CNG as an auto fuel could continue in India.

According to a recent report by Nomura, CNG could continue to grow as an auto fuel in India, even as electric vehicle adoption gathers pace across key states. The report highlighted that the state governments, especially Delhi and Maharashtra, are expected to roll out aggressive EV policies to address the problem of rising air pollution. While these policies may put some pressure on the CNG adoption pace, analysts expect both fuel types to co-exist in the coming years.

The study added that Delhi, which had already banned diesel vehicles older than 10 years nearly a decade ago, may now consider placing restrictions on CNG vehicles as a next step in its clean fuel transition journey. On the other hand, the Maharashtra EV policy could shift focus on reducing liquid fuels like petrol and diesel, rather than targeting CNG. The study further added that these moves could work as a policy tailwind for both CNG and EV adoptions in Maharashtra.

The study also pointed out that CNG could be included under the Goods and Services Tax (GST) regime. Currently, CNG is subject to a combination of state VAT, central excise duty, and central sales tax. Moving it under GST would simplify the tax structure.

In another study, Crisil Intelligence has also expressed similar projections. It stated that CNG is poised for significant growth as India is focusing on energy transition. It stated that the projected growth will be powered by government thrust, urban mobility demand and expanding distribution infrastructure. With more than 18,000 CNG stations proposed, the growth momentum for CNG adoption remains strong, stated the report.

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