India’s aluminium industry petitioned the national government for the removal of taxes on coal in the coming fiscal year in a bid to relieve the industry of skyrocketing power costs.
The Association of Aluminium Industries led the charge to remove the cess on coal in the next Union Budget, which is due to be presented later this month. According to the Association, the tax on coal is currently one-fifth of the cost of bringing coal to market.
The tax on coal, which has been raised over the years from ₹50 per metric ton to ₹400 per metric ton, has made India one of the most expensive countries in which to produce electricity using coal, noted the Association.
The Association went on to tell domestic media that the tax on coal has had a ripple effect across many areas of India’s economy.
“India’s aluminium demand is growing at a rate of 10% with economic revival of major consumer sectors like defence, aerospace, aviation, infrastructure, SMART cities, solar mission, electrical, automobiles, packaging, consumer durables among many. It has today rightly been identified amongst the Champion Sectors, where India can be a global leader.”
“India enjoys a unique natural advantage to become a global manufacturing hub for aluminium on the back of abundant raw material availability for Aluminium production (5th largest Bauxite and Coal reserves) huge pool of manpower, large market and strategic geographical location,” continued the Association. “However, aluminium is a highly capital and power-intensive industry, which takes huge investments of over ₹50,000 Cr to set up 1 mtpa aluminium smelter with alumina refinery & power plants.”
The Association says the tax on coal has bumped the cost of producing aluminium in India by ₹4,800 per metric ton, resulting in a nearly insurmountable challenge to Indian primary aluminium remaining competitive on the global market.