Concerned over the doubling of clean energy cess to Rs 400 per ton on coking coal in the Budget, the steel ministry will urge the finance ministry to reconsider the proposal, saying that, if implemented, it would put an additional burden of Rs 850 crore on the struggling domestic steel industry.
Ministry sources said the industry’s demand for scrapping the clean energy cess on coking coal is legitimate as the crucial raw material is not adequately available domestically. India’s steel firms, including the state-run SAIL and RINL, had imported 43.7 mt of coking coal last fiscal or around 80% of their annual requirement. It generally requires 0.8 tons of coking coal to produce one ton of steel.
“We have received representations from various industry associations. We will soon write to the finance ministry to roll back the hike, keeping in mind the industry’s ongoing plight,” said the source.
With the rise in domestic production of steel, imports of coking coal have been on the rise. India had imported only 19.5 mt of coking coal in 2010-11, mainly from Australia and South Africa.
The steel industry has been demanding the withdrawal of the cess on the ground that coking coal is used to produce metallurgical coke and during the process, no carbon is burnt. Considering that India’s imports remain same in the current fiscal, the additional burden would be Rs 840 crore.
Indian Steel Association’s Secretary General Sanak Mishra said, “ISA had requested the government to remove the cess on coking coal in its pre-Budget proposals. It is not an available raw material for the industry. We urge the government to remove the cess which would help the Indian steelmakers now struggling due to large imports at predatory prices.”
Also, the finance ministry did not pay heed to the steel ministry’s request for abolition of 2.5% import duty on coking coal. There had been no duty on coking coal imports for several years in the past. The government had imposed the duty in 2014, mainly to rationalise the duty structure on all varieties of non-agglomerated coal. Thermal coal also attracts 2.5% import duty.