India’s steel ministry is seeking to remove import
tax on coking coal to soften the impact of rising costs on users of the
key steel-making fuel and promote production of the alloy that’s
crucial for Prime Minister Narendra Modi’s plan to boost domestic
manufacturing.
The ministry has written to the finance department to consider its
request in the federal budget on Feb. 1, federal steel secretary Aruna
Sharma said in an interview in New Delhi. Her department has also
proposed removing taxes on ferro-chrome and ferro-nickel, ingredients
used in making stainless steel.
Benchmark prices of premium coking coal have risen 34 percent over the
past year, after cyclone Debbie affected supplies from Australia, the
biggest shipper of the commodity. Prices have remained high and may
spike again if forecasts of another similar weather disruption come
true, according to consultants Wood Mackenzie Ltd. and CRU Group.
“Doing away with the import duties will provide
steelmakers some support if prices continue to rise,” said Abhisar Jain,
an analyst at Centrum Broking Pvt. in Mumbai. “So far the steelmakers
have protected themselves by passing on the increase in raw material
costs, but that becomes increasingly difficult as costs go up.”
Indian steel producers, including state-run Steel Authority of India
Ltd. and JSW Steel Ltd., rely on imports, mostly from Australia, for
supplies of met coal.
Basic customs duty on coking coal is 2.5 percent, according to JSW Steel’s Joint Managing Director Seshagiri Rao.
