Hyderabad: India’s Bureau of Energy Efficiency (BEE) has recommended a differential taxation system for equipment manufacturers, linking taxes to the energy efficiency of their products.
“BEE has submitted its recommendations to the government, favouring low or nil taxes on producers of five-star rated or high energy efficient equipment and appliances, and higher taxes on no-star rated or low-star rated equipment,” said Sandeep Garg, energy economist, BEE.
Consumer products: The Bureau of Energy Efficiency in its recommendations has favoured low or nil taxes on makers of five-star rated goods. Madhu Kapparath / Mint
The bureau, an agency of the power ministry, formulates standards and star labels for consumer products such as air conditioners and refrigerators. The government has also asked it to notify fuel efficiency standards and labelling for automobiles in the country.
“The government may consider these recommendations and introduce differential tax system on equipment and appliance makers in the ensuing budget itself,” Garg told the media on the sidelines of a seminar on energy and climate change.
Also See More on budget 2009
Garg said the strategy behind proposing differential tax system was to encourage consumer appliance producers to come up with high energy efficiency products that not only save energy but also significantly reduce greenhouse gas emissions.
India was able to save 2,104.1MW of energy in the fiscal year ended 31 March, against a target of 1,400MW. “It has also resulted in CO2 emission reduction of 5.2 million tonnes in 2008-09 as against 2.95 million tonnes in 2007-08,” Garg said.
Pointing to significant electricity transmission and distribution in the country, Garg said several state governments—that include Karnataka, Uttarakhand, Chhattisgarh, Gujarat, Rajasthan and Uttar Pradesh—have initiated steps to purchase only three-star rated power transformers.
“The ministry of power is contemplating a plan to make it mandatory for all the states to purchase and use only the energy-efficient equipment from 1 January 2010 to ensure substantial reduction in transmission and distribution losses,” the energy economist said.
Garg said the mission of BEE through its energy efficiency standards and labelling scheme was to encourage savings of some 10,000MW of power consumption by 2012.