The Indian government has removed the import duty on thermal coal to boost its availability, given the current shortage of coal for the power and steel industries, according to media reports.
Indian Minister of Finance Pranab Mukheree stated that the 2012-13 budget proposes the removal of the 5.1 percent import duty on thermal coal until March 31, 2014. India-based coal miner Coal India has welcomed the decision, indicating that the removal of the import duty will help to relieve the pressure on the company to meet domestic demand.
As a result of the tax exemption, coal imports from overseas are expected to increase; however, some suggest that the removal of the import duty will not necessarily lead to increased imports since global coal prices are still higher than domestic prices.
Meanwhile, India's raw material costs are expected to increase due to Australia's new 30 percent mining tax.