A thick green cover in the backyard of your factory may actually exempt you from paying land tax. The ministry of environment & forests (MoEF) is mooting a mechanism to incentivise land owners for providing ecological services such as planting trees.

The compensation could be in the form of land tax exemption or providing relief from land ceiling, a government official said. The modalities of providing incentives need to be worked out by the finance ministry, he added.

In a letter to the Cabinet committee on economic affairs (CCEA), MoEF has suggested that the finance ministry could be asked to prepare an incentive package. Besides sustainable development, the move also aims at increasing the countrys forest and tree cover to one-third of the geographical area by 2012.

With incentives in place, the ministry hopes to generate private investment in forestry projects including timber production. This would reduce our dependence on import of timber.

At present, in the absence of subsidies for timber production, much of the imported timber is a product of subsidised production in a developed country. The subsidies referred to as green-box subsidies are compatible with provisions under the World Trade Organization. Such imported timber brought to the country is reflected in the pricing of the wood. As a result, we lose out, a government source said.

To offset the green-box subsidies, the ministry has alsosuggested that the import tariffs, within the WTO-bound rates, for imported timber or forest producers be enhanced.

In another attempt to increase forest cover in the country, the ministry hadearlier proposed that the industry begiven control over degraded forest land, wasteland and other public land forgrowing trees under a multi-stakeholder partnership. Investors will be selectedby inviting expressions of interest followed by fixation of entitlement packages for local communities.