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Coal Tax To Help Fund Renewable Energy In India

Issues relating to renewable energy and coal featured heavily in India Finance Minister Pranab Mukherjee’s Union Budget speech late last month.
  
Mr. Mukherjee’s highlighted the fact that coal continues to be the mainstay of India’s energy sector and 75 per cent of India’s power generation is currently coal based. 
  
Under India’s Jawaharlal Nehru National Solar Mission, an ambitious target of 20,000 MW of solar power by the year 2022 has been set. To help raise funds for India’s National Clean Energy Fund, Mr. Mukherjee proposes to levy a tax on coal produced and imported into India at a nominal rate of approximately AUD$1.21 (current exchange rates) per tonne.
  
The Finance Minister also said the Ladakh region of Jammu and Kashmir faces an extremely harsh climate and currently suffers from energy deficiency. To address this problem, it is proposed to set up solar, small hydro and micro power projects at a cost of about AUD$121 million.
  
Minister Mukherjee also proposes to provide concessions on taxes relating to machinery, instruments, equipment and appliances required for the initial setting up of solar panel based and solar thermal farms and ground source heat pumps.
  
Wind energy has shown promising growth in India in recent years and Minister Mukherjee proposed to exempt a few more specified inputs required for the manufacture of rotor blades for wind energy generators from Central Excise duty.
  
Even the solar powered rickshaw gained a mention. To encourage uptake, Mr Mukherjee proposed to provide a concessional excise duty of 4 per cent to this product, its key parts and components.
  

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