India Advocates Design Changes in Coal Power Plants to Utilize Local Resources, Mulls Tax Hike on Imports

India Advocates Design Changes in Coal Power Plants

VoM News Desk | March 9, 2024 | 10:06 AM IST | Energy, India | Follow on Google News

India Advocates Design Changes in Coal Power Plants to Utilize Local Resources, Mulls Tax Hike on Imports

India Advocates Design Changes in Coal Power Plants to Utilize Local Resources, Mulls Tax Hike on Imports

In a strategic move to bolster energy security and diminish reliance on imported coal, India’s federal coal ministry has recommended significant modifications in the design of coal-based power plants. The proposal, outlined in a report released by an inter-ministerial committee on March 7, emphasizes retrofitting power plants to accommodate the specifications of indigenous coal, thus mitigating dependence on volatile international coal prices.

Taxing High GCV Coal Imports: A Paradigm Shift

The report, titled “Strategy Paper on Coal Import Substitution,” also suggests imposing higher taxes on imported coal with high gross calorific value (GCV). This innovative approach aims to incentivize the utilization of domestic resources and reduce the financial burden on imported coal.

Streamlining Substitution Strategies: Collaborative Efforts

To streamline coal import substitution strategies, the report recommends collaboration between ministries responsible for non-regulated sector (NRS) industries and the Ministry of Coal. This collaborative effort aims to aggregate sector-specific coal requirements, enabling effective demand planning and substitution strategies.

Additionally, the report advocates for a restructured Goods and Services Tax (GST) compensation cess on coal imports, based on the value and quantity of coal. This proposed change reflects the variance in tax incidence between imported and domestic coal, aligning with efforts to promote self-sufficiency in energy resources.

The report also emphasizes the development of a multi-modal transportation network to enhance coal logistics and expedite the operationalization of captive and commercial coal blocks within the country.

India’s domestic coal production, surpassing 900 million metric tons as of March 6 in the current fiscal year, is anticipated to reach 1 billion metric tons by the end of the financial year 2023-24. This upward trajectory underscores the nation’s commitment to reducing coal imports and achieving self-sufficiency in energy resources.

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