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SteelMin seeks coking coal import duty abolition

The steel ministry has recommended to the finance ministry abolition of the 2.5% import duty on coking coal, a scarce commodity in India.

In sync with the increase in steel production, imports of coking coal in the country were also on the rise for the last few years. While India imported 29.37 mt of coking coal in fiscal 2010-11, imports went up to 41.47 mt in 2014-15, registering a growth of over 41%, as per data with India Coal Market Watch (ICMW).

“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 ton of coking coal to produce one ton 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 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 a 2.5% duty, mainly to rationalise the duty structure on all varieties of non-agglomerated coal. Thermal coal also attracts 2.5% import duty.

Analysts feel 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.

There is also a demand from the industry to remove the Rs 200 per ton 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.