Assocham calls for coal incentives introduced in budget to continue beyond March, 2014

With coal shortages set to increase over the coming  years, the government will have no option but to design policies that favor the use of imported coal.

 

Recognising this, Assocham has called for incentives introduced in this year's budget--waiver of basic customs duty on thermal or steam coal and the reduction in counter veiling duty (CVD) from 5% to 1%--to continue beyond March, 2014.

 

• The industry association argues that imported coal is much more expensive than domestic coal, and life for developers has been made even more difficult with the two major import destinations--Indonesia and Australia--imposing mining taxes on coal imports.
  
• Clearly, the situation isn't rosy. What's worse, there is no domestic gas till 2015-16 for new power plants and with coal shortages set to balloon to 450 million TPA by 2012-13, the coal demand supply gap isn't likely to come down any time soon either
  
• According to Assocham, the power ministry is already advocating the use of imported coal for power generation, and policies to compel developers to use a blend of domestic and imported coal are also underway.
  
• In its plea to the coal ministry, Assocham has therefore argued that the extension of incentives will only promote much required investment in the power sector and aid the overall economic growth of the nation. The association also claims that the relaxation will have no adverse effects on the indigenous coal industry which is likely to suffer from a negative coal balance beyond 2020-21 anyway.

 

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