India’s bid to be seen as an environment friendly country got a stamp from finance minister Pranab Mukerjee, who announced a slew of tax rebates to promote green technologies and a National Mission on hybrid and electric vehicles.
The budget indicated the government's intention to promote cleaner fuel, such as hydrogen and electricity, for the automobile industry, which witnessed 30% growth in 2010. The sector had been severely criticised by environment minister Jairam Ramesh, who termed diesel and Sports Utility Vehicles (SUV) as polluting India’s urban air.
However, there was no increase in duty on SUVs, which Sunita Narain, Director Center for Science and Environment termed “unacceptable”. Kirit Parekh, former member of the Planning Commission and chairperson of the expert group on low carbon strategy for inclusive growth said, “The measures will certainly help in reducing urban air pollution, but I am not sure on what sort of impact it will have on India’s (climate change causing) green house gas inventory.”
The country’s urban air quality has deteriorated rapidly in the past five years, with road development not at par with the rate of vehicular growth.
Mukerjee, who had earlier provided funds for 15,260 low floor buses, has proposed additional funds for development of metro networks, an alternative to use of personal vehicles in cites such as Chennai, Kolkatta and Bangalore. However, for Delhi and Mumbai metros, the Central assistance has been reduced.
The FM announced concessional excise duty of 10% for fuel cell or hydrogen cell technology. Import of parts of hybrid vehicles has been exempted from custom duty and a concessional rate of 5% excise has been proposed to incentivise their domestic production. In addition, the excise duty on a kit installed for converting a fossil fuel vehicle into a hybrid (such as CNG) has been reduced to 5%.
“To me, the budget scores nowhere on the green index. The sops for hybrids are nowhere. The FM has lost an opportunity to deal with the global fuel crises by reducing duty on buses to promote public transport,” Nairain said.
LED lights, considered 80% energy efficient to conventional lighting systems, would now attract an excise duty of 5% and exemption from Counter Veiling Duty (CVD). Import of another clean energy source, solar lanterns, hugely popular in rural India, will now attract custom duty of 5% as compared to the existing rate of 10%. Manufacturing of solar modules, which constitute solar panels, will not attract any custom duty henceforth.
Laundary soaps, which use less water and are gentle on soil, have been exempted from basic custom duty. Use of green processes instead of chemicals in the leather tannery industry will attract zero basic excise duty.
While the environment ministry’s budget increased by about Rs 300 crore to Rs 1,567 crore, Mukerjee also alloted Rs 200 crore each, for cleaning rivers and lakes of cultural and historic importance, other than the Ganga, and launching of the Green India Mission aimed to increase India’s forest cover by five million hectares.