New Delhi: The government plans tax sops like excise and import duty exemptions to promote the use of bio-diesel and ethanol in auto fuel.

The ministry of new and renewable energy, in the draft national policy on bio-fuel has suggested a slew of fiscal incentives, and a National Biofuel Development Board to promote doping of petrol with ethanol and diesel with non-edible oil.

The ministry's draft note for the cabinet proposes excise duty exemption to biofuel in pure as well as blended form up to a certain percentage with a view to lower price of biofuel for the end user.

It also proposed custom and excise duty exemption on plant and machinery used for processing oil seeds for biofuel production.