Paying heed to the industry’s demand, the steel ministry has recommended to the finance ministry abolition of 2.5% import duty on coking coal, which is scarce commodity in the country.
In sync with the increase in steel production, the imports of coking coal in the country was also on the rise for the last few years. While India imported 19.5 MT of coking coal in the 2010-11 fiscal, the imports went up to 43.7 MT in the last fiscal, registering a growth of over 124%.
“The country depends significantly on imported coking coal (about 80%) due to the poor quality of domestic coal and lack of adequate local production/supply constraints. Globally, no major steel producing nation retains an import duty on coking coal. Hence, it is being proposed that the import duty on coking coal may be waived completely,” the steel ministry wrote in its recommendations to the finance ministry.
Coking coal is an import raw-material in steel-making. It generally requires 0.9 tonne of coking coal to produce one tonne of steel. India imports coking coal from various countries including Australia, South Africa and others. “In view of the rising imports of coking coal, we have requested the finance ministry to abolish the duty. The industry has been demanding the withdrawal of the duty since it was imposed in 2014,” a senior steel ministry official said.
Though there had been no duty on coking coal imports for several years in the past, the government had in 2014 imposed 2.5% duty, mainly to rationalise the duty structure on all varieties of non-agglomerated coal. Thermal coal also attracts 2.5% import duty.
Vishal Aggarwal, vice-chairman and managing director of Visa Steel, said that since the steel industry has been grappling with a lot of issues including rising imports and subdued prices, the waiver of the duty would provide the industry the much-needed competitiveness.
Indian steelmakers mostly depend upon the imports of coking coal. There is also a demand from the industry to remove the R200 per tonne clean energy cess on coking coal on the grounds that cooking coal is used to produce metallurgical coke and during the process no carbon is burnt. The steel ministry, however, is yet to recommend on anything to its finance counterpart.