India backs clean energy with new wave of tax breaks
India’s latest budget includes souped-up subsidies and tax breaks for clean energy in a bid to boost the country’s economy.
While the emerging superpower is expecting 6.9 per cent GDP growth between 2011 and 2012 this would represent a significant drop on the 8.4 per cent growth the country experienced over the previous two financial years.
As a result budget documents reveal the government’s intention to launch the Twelfth Five Year Plan later this year with the aim of “faster, sustainable and more inclusive growth”.
Finance minister Pranab Mukherjee said that under the plan India would exempt clean energy technologies such as solar equipment from taxes as part of a package designed to boost infrastructure spending.
“In order to fully realise our potential in the realm of solar energy, solar thermal projects need encouragement,” Mukherjee said in his budget speech. “I propose to fully exempt plant and equipment etc for the initial setting up of such projects from special countervailing duties.”
Some components for low carbon cars including lithium ion batteries will also be entirely free of some customs duties, while excise duty on LED lamps is similarly being reduced to six per cent.
In contrast, import duties on SUVs were raised to 75 per cent from 60 per cent, while the excise duty on large cars made in the country was also increased to 27 per cent from 22 per cent.
Although funding for prevention and control of pollution fell from Rs.389 crore in 2011-2010 to Rs.312 crore this year, the national afforestation and eco-development programmes did see an increase from Rs.253 crore to Rs.342 crore.
Aditi Dass, director of programmes in India at The Climate Group, said the government was taking “a step in the right direction” with regards to its target of generating 20,000GW of electricity through clean sources by 2020.
“But while the solar, LED and hybrid vehicle exemptions – all of which are huge technology opportunities for India to boost its economy – are welcome, the dips in pollution control and conservation programmes are disheartening,” she added.
“The big car duties may encourage consumers to go for more fuel-efficient cars, but much more aggressive subsidies are needed to cultivate innovation, technology advancement and global competition, so that India can surge ahead to claim global clean revolution leadership.”
While the emerging superpower is expecting 6.9 per cent GDP growth between 2011 and 2012 this would represent a significant drop on the 8.4 per cent growth the country experienced over the previous two financial years.
As a result budget documents reveal the government’s intention to launch the Twelfth Five Year Plan later this year with the aim of “faster, sustainable and more inclusive growth”.
Finance minister Pranab Mukherjee said that under the plan India would exempt clean energy technologies such as solar equipment from taxes as part of a package designed to boost infrastructure spending.
“In order to fully realise our potential in the realm of solar energy, solar thermal projects need encouragement,” Mukherjee said in his budget speech. “I propose to fully exempt plant and equipment etc for the initial setting up of such projects from special countervailing duties.”
Some components for low carbon cars including lithium ion batteries will also be entirely free of some customs duties, while excise duty on LED lamps is similarly being reduced to six per cent.
In contrast, import duties on SUVs were raised to 75 per cent from 60 per cent, while the excise duty on large cars made in the country was also increased to 27 per cent from 22 per cent.
Although funding for prevention and control of pollution fell from Rs.389 crore in 2011-2010 to Rs.312 crore this year, the national afforestation and eco-development programmes did see an increase from Rs.253 crore to Rs.342 crore.
Aditi Dass, director of programmes in India at The Climate Group, said the government was taking “a step in the right direction” with regards to its target of generating 20,000GW of electricity through clean sources by 2020.
“But while the solar, LED and hybrid vehicle exemptions – all of which are huge technology opportunities for India to boost its economy – are welcome, the dips in pollution control and conservation programmes are disheartening,” she added.
“The big car duties may encourage consumers to go for more fuel-efficient cars, but much more aggressive subsidies are needed to cultivate innovation, technology advancement and global competition, so that India can surge ahead to claim global clean revolution leadership.”
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