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Cement sector wants coal customs duty scrapped

India Coal Market Watch

December 21: The cement industry has urged the government to scrap the basic customs duty of 2.5% on imports of coal.

In its pre-Budget (2016-17) memorandum to Finance Minister Arun Jaitely, the Cement Manufacturers Association (CMA) said that coal is one of the important fuels used by the cement industry of which it has been experiencing perennial shortages. 

Approximately, only 26% of linked coal is received by the member companies against their total fuel requirement for kiln under the Coal Linkage Scheme, it pointed out.

This adversely impacts the cement industry through increased fuel costs, as the balance requirement of fuel has to be necessarily procured from the open market/e-auctions, imports or use of alternative fuel resources like pet coke at a substantially higher rate than linked coal, the memorandum said.

In the last Budget (2015-16), the basic custom duty on both steam coal and bituminous coal was increased from 2% to 2.5% while the basic customs duty of coking coal was increased from nil to 2.5%, whereas on the final product “cement”, there is no basic customs duty. 

“This leads to an anomalous situation of ‘import duty on inputs being higher than on the finished product’, the memorandum said.

“It is urged that the government may kindly scrap the import duty on coal and other input materials used in production of cement. This would remove the aberration in the structure of duties existing in cement imports vis-à-vis its inputs,” the CMA said.