Page 1 - Tax Regime for Improved Cookstoves and Its Implications
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POLICY BRIEFT E R I P o l i c y B r i e f September 2014
The Energy and Resources Institute
Tax Regime for
Improved Cookstoves
and Its Implications
CONTENTS Introduction
Introduction Around 160 million households in India rely on traditional biomass—
Tax Structure for Improved Cookstoves firewood, cattle dung, and crop residues as cooking fuel. When biomass
Challenges is burnt in traditional inefficient cookstoves it emits smoke that has
Recommendations significant health and climate impacts resulting in 10 lakh premature
References deaths per year. Efforts to replace inefficient traditional cookstoves
with cleaner, more efficient improved biomass cookstoves have been
Authors in process across the country for several years now, primarily driven
P R Krithika and Abhishek Kar by grassroots institutions and government technical institutes.
Advisors One of the biggest hurdles inhibiting the uptake of improved
Mr I H Rehman and Mr Prabir Sengupta (biomass) cookstoves (hereafter referred to as ICs) is price. Past studies
have advocated multiple approaches to make ICs more affordable like
The Energy and Resources Institute subsidies for stoves, low interest financing, etc. However, in addition
Darbari Seth Block, IHC Complex, to these more commonly suggested measures, it is important to look
Lodhi Road, New Delhi- 110 003 at the taxation structure for ICs. While taxes constitute a significant
Tel. 2468 2100 or 4150 4900 (6%–26%) portion of the final cost of product along with associated
Fax. 2468 2144 or 2468 2145 documentation-related complexities, it has not received the attention
India +91 Delhi (0) 11 it deserves. This Policy Brief discusses the taxation landscape of the
improved biomass cookstoves sector with a view to sensitize policy-
www.teriin.org makers and other stakeholders on the implications of taxation and is
aimed at lowering taxes/providing tax breaks, thus paving the way for
greater scale up and private sector participation.
Tax Structure for Improved Cookstoves
The cookstove sector in India is characterized by (mostly) small
manufacturers as suppliers and grassroots institutions as promoters
of ICs, primarily in rural areas. Figure 1 shows the geographical spread
of forced draft and natural draft domestic cookstove manufacturers in
India (approved by MNRE).
The Energy and Resources Institute
Tax Regime for
Improved Cookstoves
and Its Implications
CONTENTS Introduction
Introduction Around 160 million households in India rely on traditional biomass—
Tax Structure for Improved Cookstoves firewood, cattle dung, and crop residues as cooking fuel. When biomass
Challenges is burnt in traditional inefficient cookstoves it emits smoke that has
Recommendations significant health and climate impacts resulting in 10 lakh premature
References deaths per year. Efforts to replace inefficient traditional cookstoves
with cleaner, more efficient improved biomass cookstoves have been
Authors in process across the country for several years now, primarily driven
P R Krithika and Abhishek Kar by grassroots institutions and government technical institutes.
Advisors One of the biggest hurdles inhibiting the uptake of improved
Mr I H Rehman and Mr Prabir Sengupta (biomass) cookstoves (hereafter referred to as ICs) is price. Past studies
have advocated multiple approaches to make ICs more affordable like
The Energy and Resources Institute subsidies for stoves, low interest financing, etc. However, in addition
Darbari Seth Block, IHC Complex, to these more commonly suggested measures, it is important to look
Lodhi Road, New Delhi- 110 003 at the taxation structure for ICs. While taxes constitute a significant
Tel. 2468 2100 or 4150 4900 (6%–26%) portion of the final cost of product along with associated
Fax. 2468 2144 or 2468 2145 documentation-related complexities, it has not received the attention
India +91 Delhi (0) 11 it deserves. This Policy Brief discusses the taxation landscape of the
improved biomass cookstoves sector with a view to sensitize policy-
www.teriin.org makers and other stakeholders on the implications of taxation and is
aimed at lowering taxes/providing tax breaks, thus paving the way for
greater scale up and private sector participation.
Tax Structure for Improved Cookstoves
The cookstove sector in India is characterized by (mostly) small
manufacturers as suppliers and grassroots institutions as promoters
of ICs, primarily in rural areas. Figure 1 shows the geographical spread
of forced draft and natural draft domestic cookstove manufacturers in
India (approved by MNRE).
