Concerned over the doubling of clean energy cess to Rs 400 per tonne 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.
A senior steel ministry official 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 tonne of coking coal to produce one tonne 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 `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.”
The Indian Metallurgical Coke Manufacturers Association has also written to the finance ministry to remove the cess. “Clean energy cess of Rs 400 per tonne on coking coal has a direct impact of Rs 600 per tonne on metallurgical coke produced as it requires 1.5 tonne of coking coal to make one tonne of metallurgical coke. At the prevailing price, this equals an additional cost of over 6.5% in production of one tonne of met coke from imported coking coal.”
In fact, 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.