It is reported that the coal ministry wants the finance ministry to reduce the 5.1% import duty on thermal coal and continue with the existing zero import duty on coking coal to enable larger import by power and steel sectors.
According to a coal ministry official, while the steel sector’s demand for coking coal is expected to go up by another 18-20% in 2010-11, Coal India Ltd which currently meets 82% of the power sector’s thermal coal demand, will not be able to keep pace with the power sector’s incremental need because of hurdles in developing new mining projects. So the ministry wants to encourage the power sector to go for larger imports
The official said the ministry has asked CIL to give its opinion on the issue after which it will put forward its proposal to the finance ministry but CIL has not given any comments so far.
According to sources, the Australian government has requested the coal ministry to lobby for reducing the import duty on thermal coal and persist with the zero import duty on coking coal, since it foresees an opportunity to supply more coal to India from Australia.
An Australian trade commission delegation, which recently came to India, presented a paper to the coal ministry saying reducing the import duty of thermal coal and keeping the zero import duty on coking coal intact would not only strengthen bilateral ties but would also enhance the availability of affordable inputs for two Indian infrastructure industry-power and steel.
The trade commission pointed out that coking coal import, which was 12 million tonne in 2006-07 from Australia, would touch 18 million tonnes to 20 million tonnes in 2010-2011 and 25 million tonnes by 2012, taking into account India’s steel capacity addition.