The cess slapped on coal in last year's budget will help pay for schemes to protect and regenerate forests and clean up polluted sites announced in this year's Budget.

Finance Minister Pranab Mukherjee has allocated Rs. 200 crore each to the Green India Mission, an ambitious ten-year Mission which is a key element of India's climate change strategy, and environmental remediation programmes to combat the pollution problems that have emerged as serious public health concerns.

The money has been earmarked from the National Clean Energy Fund. This Fund was announced exactly a year ago, to collect revenue from the Rs. 50 a tonne tax imposed on both Indian and imported coal. It was to be used to sponsor research and innovative projects in clean energy technology, which would help combat climate change. Another special allocation of Rs. 200 crore has been made to clean up some important rivers and lakes of cultural and historical significance, to supplement the ongoing efforts to clean up the Ganga.

Apart from announcing a National Mission for Hybrid and Electric Vehicles, the government has decided to exempt some parts of hybrid vehicles from customs duty and also impose a concessional five per cent rate of excise duty to incentivise their domestic production. Concessional excise duty of ten per cent is being extended to hydrogen fuel cell technology as well, while imported batteries for electric cars will also be exempted from customs duty and face a concessional excise duty. Excise duty on indigenous kits to convert fossil fuel vehicles into hybrid cars has been halved. Light emitting diodes (LEDs) will also face a lower excise duty, while solar lanterns face a lower customs duty. Eco-friendly soap elements and non-polluting tanning processes for the leather industry have been given concessions.