Suggestions of a study funded by the UK Foreign and Commonwealth Office (UKFCO) on fiscal instruments for climate-friendly development in Tamil Nadu will not involve additional cost implications for the State government, according to K. R. Shanmugam, Director of the Madras School Economics (MSE).

The suggestions included the levy of green cess on electricity generation; cess on waste disposal and subsidy for co-incineration of waste in cement plants; tax concessions to construction industry and taxes on polluting vehicles. The proceeds of collections to be earned through the levy could be used to promote renewable sources of energy, Prof. Shanmugam said, addressing a function to launch report on fiscal instruments for low-carbon investment and industrial development in Tamil Nadu.

The study, being supported by the British High Commission’s Prosperity Fund in India, was implemented by an Indo-UK consortium of the Confederation of Indian Industry (CII), Euonomia Research and Consulting, UK and the MSE.

The proposed levy of green cess could be imposed on conventional producers of power, as done in Gujarat, as electricity generation accounted for 60 per cent of the energy sector’s emission in Tamil Nadu. The case of Maharashtra where industrial and commercial users were being levied with another cess could be replicated.

As for the tax concessions to the construction industry, reduction of Value Added Tax for installation of energy saving materials and rebate on property tax for use of such materials could be offered. Municipal corporations, having higher vehicle density, could levy congestion tax. Vehicles using alternative fuels could be provided with reduced VAT. In respect of old vehicles, revised green tax could be imposed, Prof. Shanmugam explained.

K. V. Venkatagiri, Prinicipal Counsellor, CII_Sohrabji Godrej Green Business, said the study, which also covered two other States – Odisha and West Bengal, began in July 2011. Final recommendations were expected to be submitted by December this year. In the case of the eastern States, low carbon refunding schemes for the sectors of power, industry and waste had been recommended. In total, seven fiscal instruments had been shortlisted. He added that Jadavpur University was one among the consortium partners.

David Wootton, London Mayor, presented a report on national and State policies for low carbon development to M. Velmurugan, Executive Vice Chairman, Guidance Bureau in the Tamil Nadu Industries Department. The Mayor said the market for low carbon technology in India was expected to expand to $ 135 billion by 2020.

He pointed out that the City of London had a key role to play, offering a core of experts with practical market experience across the supply chain of knowledge and products. There were around 115 clean tech firms on the London Stock Exchange with a total market capitalisation of nearly 70 billion pounds.

Mike Nithavrianakis, British Deputy High Commissioner in Chennai, said his country had been working closely at Central and State levels in India with businesses, research and academic institutions, municipalities and civil society organisations to address energy, climate and growth concerns.

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