IBA wants blanket tax holiday for CBG producers to bolster investments

The Indian Biogas Association (IBA) has called on the Modi Government to introduce corporate tax holidays for the compressed biogas (CBG) sector in the General Budget that will be proposed on the first day of February. The IBA holds that this will boost the investment and foster renewable energy development.

In a letter to Finance Minister Nirmala Sitharaman, the IBA has proposed a complete tax waiver for the CBG producers, especially during their initial years of operation. The IBA says that this will incentivize businesses to invest in cleaner energy solutions.

The industry body highlighted in the letter that in FY2024-25, the 100 operational commercial CBG plants in the country collectively generated sales worth Rs 1,200 crore. While a tax waiver would result in an estimated Rs 100 crore revenue loss for the government, the IBA emphasized that this short-term loss would catalyze long-term growth in the renewable energy sector, drawing private investments, creating jobs and helping India achieve its clean energy targets.

The IBA also advocated for using agricultural residues like paddy straw for the biogas production, reducing air pollution from stubble burning. They suggested scaling up incentives like Haryana’s Rs 1,000-per-acre scheme for farmers who are willing to stay away from stubble burning, with states like Punjab, Uttar Pradesh, and Bihar leading implementation.

To further support biogas producers, the IBA has also proposed frameworks enabling the sale of carbon credits on domestic and international platforms, enhancing revenue opportunities. Additionally, the association called for expedited legislation on renewable energy certifications and tokenization to improve profitability.

The IBA also recommended introducing cap-and-trade practices for carbon-intensive entities and subsidizing carbon premium prices to initiate green practices. Simplifying certification and trading processes could bolster exports and help India meet climate goals while empowering farmers with additional income and promoting clean energy growth.

At the beginning of this year, IBA sought an investment of ₹30,000 crore in India to bolster the procurement of necessary machinery and equipment for biomass supply to compressed biogas (CBG) plants, with the aim of reducing LNG imports by 12 MMTA.

In the recently held Renewable Energy India (REI) Expo-2024, IBA revealed that investments totalling Rs 1,850 crore have been pledged to the biogas sector.