Prime Minister Narendra Modi’s office has proposed waiving a tax on coal to help finance pollution-curbing equipment, according to documents, but the move would also make coal more competitive in price with solar and wind energy.
Mr. Modi’s office has proposed waiving the carbon tax of ₹400 per tonne that was levied on the production and import of coal, according to the documents reviewed by Reuters.
The documents say the savings would improve the financial health of utilities and distribution companies, and help power producers to install pollution-curbing equipment. The PMO and the Power Ministry did not respond to requests seeking comment on the proposal.
Despite struggling with some of the world’s worst air pollution levels, India has already pushed back a deadline to cut emission levels to up to 2022.
Over half of India’s coal-fired plants are already set to miss a phased deadline starting December 2019 to cut emissions of sulphur oxides, which have been proven to contribute to lung disease.
The proposal is a big win for India’s coal industry, which has lobbied for government help, citing high debt levels and burgeoning payment dues from government-owned power distribution companies. Distribution companies owed power producers more than $11 billion in dues as of October, according to government data.
Hardik Shah, Deputy Secretary at Mr. Modi’s office, advocated waiving the carbon tax on coal in an October note to the top bureaucrat at India’s Power Ministry, seen by Reuters. “A possible solution is to waive the Goods and Services Tax compensation cess on coal,” he said in the note on installation of equipment to cut emissions of sulphur oxides.