Steel Ministry wants review of policies affecting producers

Steel Ministry wants review of policies affecting producers

Even as the Centre has extended curbs on steel imports, the Steel Ministry is pushing for a rethink on domestic policies that are hurting producers. This includes the railways’ freight policy and the clean energy cess that was doubled in this year’s Budget.

“While power costs in India are higher than China, Japan or Korea, our steel makers also suffer due to high railway freight,” said a senior government official. “With (rates in) sea freight becoming very low, major consumers of steel near the coast, prefer to import steel as the cost of reaching finished steel by railways to those areas is higher by about Rs.1,000 per tonne,” he said.

The Steel Ministry wants the Indian Railways to change the tariff classification for steel goods and treat them on par with coal, which, it reckons, could cut the logistic costs of moving finished steel by around 14 per cent. The Ministry, which had opposed the 2.5 per cent import duty on coking coal when it was first introduced in 2014, will continue to seek its abolition, since 90 per cent of India’s coking coal requirements are imported.

Moreover, it has questioned the levy of clean energy cess on coking coal since it is distinct in quality from the coal used in thermal power plants.

First introduced in 2010, Finance Minister Arun Jaitley renamed the levy Clean Environment Cess in this year’s Budget and doubled its rate from Rs.200 per tonne to Rs.400 per tonne of coal, lignite and peat.

“It makes sense to impose this cess on thermal coal to encourage other less-polluting fuel sources, but coking coal is not only cleaner with lower ash content, but also an essential requirement for steel production with no alternatives,” the official said, explaining the rationale for seeking an exemption. The Parliament’s Standing Committee on Coal and Steel has backed the Ministry's views on scrapping the cess and import duty on coking coal and advised it to take up these issues at the highest levels of government, he added.

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