Aluminum industry calls for removal of coal tax from budget

The aluminum industry, a key contributor to India’s V-shaped economic recovery, has demanded the scrapping of the coal tax in the Union budget to be tabled next Tuesday, to reduce soaring electricity costs for industries.

Incidentally, NITI Aayog also highlighted the challenges of high energy costs for Indian aluminum producers, resulting in a competitive disadvantage against global players. The coal tax alone accounts for 20% of the cost of extracting coal. As a result, despite a competitive advantage in coal reserves, India is one of the most expensive countries to generate electricity from coal. The coal tax has been doubled several times, from Rs 50/MT to Rs 400/MT.

Currently, the coal tax is on top of the increased cost of electricity from $8/MT to $64/MT of aluminum production costs.

Read also | Roadmap prepared to improve coal stocks: railways

“The demand for aluminum in India is growing at a rate of 10% with the economic revival of major consumer sectors such as defence, aerospace, aviation, infrastructure, smart cities, solar mission, electricity, automotive, packaging, durable consumer goods, etc. identified among the champion sectors, where India can be a global leader.

“India enjoys a unique natural advantage to become a global aluminum manufacturing hub with abundant availability of raw materials for aluminum production (5th largest bauxite and coal reserves), huge basin of labor, a large market and a strategic geographical location.However, aluminum is a capital and energy intensive industry, which requires huge investments of more than Rs 50,000 Cr to put in place. places a 1 mtpa aluminum smelter with an alumina refinery and power plants,” the Aluminum Industries Association said.

Read also | ‘Hard hit’ by high costs, Indian metallurgical plants seek to cut coal consumption

The high coal tax for non-energy industries is having a negative impact on the sustainability of energy-intensive industries in India, especially the aluminum industry, where coal contributes 40% of production costs. Commodities such as aluminum are very sensitive to prices on global commodity markets. The current coal tax raises the cost of aluminum by Rs. 4800/MT (US$64), making aluminum produced by India uncompetitive in world markets, he said.

A report by NITI Aayog on “Need for Aluminum Policy in India” also highlighted the challenges of high energy costs for Indian aluminum producers, resulting in a competitive disadvantage against – vis-à-vis global players.

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