Policy  Brief Perspectives on a Water Resource Policy for India – TERI Perspectives on a Water Resource Policy for India – TERI
This is a series of policy briefs by TERI based on its research work in specific areas. These briefs are being made available to members of parliament, policy-makers, regulators, sectoral experts, civil society and the media. The purpose is to focus on key issues and list our policy recommendations to encourage wider discussion and debate. Your comments and suggestions will be of immense value.

September 2014

Tax Regime for Improved Cookstoves and Its Implications

Around 160 million households in India rely on traditional biomass - firewood, cattle dung, and crop residues as cooking fuel. When biomass is burnt in traditional inefficient cookstoves it emits smoke that has significant health and climate impacts resulting in 10 lakh premature deaths per year. Efforts to replace inefficient traditional cookstoves
with cleaner, more efficient improved biomass cookstoves have been in process across the country for several years now, primarily driven by grassroots institutions and government technical institutes. One of the biggest hurdles inhibiting the uptake of improved (biomass) cookstoves (hereafter referred to as ICs) is price. Past studies
have advocated multiple approaches to make ICs more affordable like subsidies for stoves, low interest financing, etc. However, in addition to these more commonly suggested measures, it is important to look at the taxation structure for ICs. While taxes constitute a significant (6%-26%) portion of the final cost of product along with associated documentation-related complexities, it has not received the attention
it deserves. This Policy Brief discusses the taxation landscape of the improved biomass cookstoves sector with a view to sensitize policymakers 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.

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