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As against the Command and Control approach to managing environment, the Economic or Market Based Instruments (MBIs) approach sends economic
signals to the polluters to modify their behaviour. The MBIs used for environmental taxes include pollution charges (emission/affluent & tax/pollution tax), marketable permits, deposit refund system, input taxes/product charges, differential tax rates, user administrative changes and subsidies for pollution abatement, which may be based on both price and quality. India has been already collecting taxes on water and air via the Water Act and the Air Act. Due to its experience India is among the chief participant in devising the MBIs in the world.