Budget 2020 wishlist: Steel firms want zero duty on pet coke, coking coal

Topics Budget 2020 | pet coke | Coking coal

As per the existing duty structure, both coking coal and anthracite coal attract 2.5 per cent import duty
In the run-up to the Budget for FY21, steel producers have pitched for slashing import duties on critical ingredients such as pet coke, coking coal, anthracite coal and metallurgical coke. The country's steelmakers had substantive dependence on imports for these raw materials owing to lack of ample domestic resources.

As per the existing duty structure, both coking coal and anthracite coal attract 2.5 per cent import duty. The government of India levies 10 per cent duty on pet coke imports whereas anthracite coal imports are taxed at 2.5 per cent.

“Anthracite coal, coking coal, coke and pet coke are vital ingredients in steel making. Slashing import duties on these imported raw materials will help the steel industry to achieve and sustain cost competitiveness. Non-availability of these inputs both in quantity and quality is impeding the growth of the domestic steel industry”, said an official with a leading steel producer.

Fifty to 80 per cent of all low-ash metallurgical coal is imported into India.

In its pre-Budget submission, Federation of Indian Mineral Industries (Fimi) has suggested that the import duty on low ash metallurgical coal mentioned above should be brought down to 2.5 per cent from existing  10 per cent to provide incentive to the domestic industry especially when its import does not hurt the domestic producers of such minerals.  

Among key inputs, pet coke is gaining currency as one of the important carbon-bearing inerts used by the steel industry. It has partially replaced costlier and scarce coking coal, adding value to the end product (metallurgical coke) by increasing the carbon content and yield of coke, leading to lessen dependence on imports. “Pet coke (two per cent Sulphur grade) is a relatively cheaper substitute of met coke and should, therefore, be encouraged in the domestic industry to help save precious foreign exchange and make domestic steel mills more competitive by lowering their cost of production”, Fimi noted.

Backing the case for zero duty on coking coal, Fimi reasoned that in the Budget for  2014-15, the exemption available for coking coal was removed by Government of India, bringing it at par with other coal grades. 

“This amendment has adversely affected the steel manufacturers in India and ‘Make in India’ drive. Coking coal is one of the principal raw materials being used in the manufacture of steel and predominantly used for making coke for use in steel making and thus forms a major part of the final price of the steel. Levy of 2.5 per cent of basic customs duty on coking coal and simultaneously fixing the import duty of five per cent on coke has adversely affected the costing of steel”, Fimi reasoned.

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