A Parliamentary committee today suggested removal of 2.5 percent duty on import of coking coal and scrapping of clean energy cess of Rs 400 a tonne, as these measures hinder competitiveness of domestic steel firms.
Standing Committee on Coal and Steel, chaired by Rakesh Singh, pointed out that expenditure by Indian steel companies on research and development (R&D) remained a dismal 0.05-0.5 percent of their sales turnover, which is lower compared to 1-2 percent by those in China, Japan and South Korea.
The committee found that at the present rate of per KWH power in the country, domestic steel producers are at a disadvantage of Rs 800-900 per tonne as compared to steel producers in China, Japan and Korea.
Certain levies and duties in the form of District Mineral Fund (DMF), National Mineral Expansion Trust (NMET), duty on import of raw material such as coking coal (at 2.5 percent), levy on clean energy cess etc, which are imposed on steel producers in India, it added.
Steel Ministry desired that duty on clean energy cess and on coking coal be removed as 90 percent of coking coal is imported due to lack of domestic availability and it being cleaner source having lower ash content and essential input material for production of steel, the panel said.
The committee recommend that the Ministry should take up the matter at the "highest level with the authorities and also the states concerned and impress upon them for waiving off the import duty and clean energy cess on coking coal" as it being the major and cleaner raw material for production of steel.
On investments in R&&D, the panel said steel firms like SAIL, Tata Steel, JSW Steel and Essar Steel have accomplished some significant R&D works in the area of raw material beneficiation, agglomeration and product development.
"However, the actual investment on R&D by steel companies in India has remained very low in the range of 0.05-0.5 percent of the sales turnover compared to R&D investments in steel companies abroad.
"For instance, in the countries like China, Japan and South Korea etc, annual R&D investments are very high and varies in the range of 1-2 percent of their sales turnover," it added.
In comparison, during 2014-15 SAIL's expenditure on R&D was only 0.56 percent of the turnover. Similarly, expenditure by RINL, NMDC, MOIL and MECON during 2014-15 was 0.28 percent, 0.15 percent, 0.73 percent and 0.53 percent, respectively of their total turnover, it said.
"Committee recommend that Indian steel companies, both public and private, should make an attempt to benchmark their R&D spending with internationally prevalent best practices in the sector. The Committee would like to be apprised of the steps taken by all steel PSUs and private sector companies in this regard," it said.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
