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India announces solar, LED and hybrid vehicle exemptions in annual budget

21 March 2012
India announces solar, LED and hybrid vehicle exemptions in annual budget

NEW DELHI: India's Finance Minister Pranab Mukherjee has unveiled the country's annual budget, which includes exemptions and subsidies on clean technologies to help boost India’s economy.

The Indian Union Budget 2012 was presented before the Indian Parliament by the Finance Minister, Pranab Mukherjee on March 16, 2012. 

During his speech, Minister Mukherjee said that India would reduce subsidies, accelerate reforms and state asset sales, and boost infrastructure spending.

Exemptions on clean energy technologies such as solar equipment were confirmed. He said: "In order to fully realise our potential in the realm of solar energy, solar thermal projects need encouragement. I propose to fully exempt plant and equipment etc. for the initial setting up of such projects from special countervailing duties (anti-subsidy duty)." 

As well as for solar energy, further announced measures which will drive India’s clean technology scale-up and lower its greenhouse gas emissions include:

  • No customs duties on hybrid cars. Specified parts required for the manufacture of hybrid vehicles will enjoy full exemption from basic customs duty and special CVD. This concession is being extended to specified additional items and lithium ion batteries imported for the manufacture of battery packs for supply to electric or hybrid vehicle manufacturers.
  • Efficient lighting support. The Minister exempted a coating chemical used in CFL lamps from excise duty. Excise duty on LED lamps is also being reduced to 6%.
  • More duties on big cars. Import duties on SUVs and MUVs raised to 75% from 60%. The excise duty on large cars made in the country was also raised to 27% from 22%. 
Although the total outlay saw a drop in funding for prevention and control of pollution from Rs.389 crore in 2011-2010 to Rs.312 crore, the national afforestation and eco-development programmes did see an increase from Rs.253 crore in 2011-2012 to Rs.342 crore. 

Minister Mukherjee also added that Rs.200 crore would be spent on research to develop plant and seed varieties with increased yield and improved resistance to climate change. 

Aditi Dass, Director of Programmes in India, The Climate Group says: “The Government wants to generate 20,000 gigawatts of electricity through clean energy by 2020, and these budget announcements are a step in the right direction towards achieving that goal. 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 programs are disheartening. 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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