To fast track India’s industrial growth, FM gives sops to mining

With Finance Minister Pranab Mukherjee attributing India’s slowdown to lack of industrial growth, sectors involved in manufacturing and mining were bound to have got sops. Coal mining projects have been exempted from paying any customs duty while importing exploration and mining equipments. He has also scrapped taxes on imported coal used by power companies.

Mukherjee reduced the basic customs duty on machinery and instruments for surveying and prospecting to 2.5 per cent which was between 10 per cent and 7.5 per last fiscal. In 2009-10, Indian miners imported mining and exploration equipment worth Rs 3,500 crore from various countries. Mukherjee reasoned in his speech that there is a need for better surveying and prospecting for minerals to improve the productivity and efficiency of the mining sector.

While the mining industry has hailed the decision, environmentalists are a worried lot. Since mining involves environmental clearances, sops to the mining industry would make it easy for the miners to expedite clearances by creating fait-accompli scenarios for the projects. Former Union Minister for Environment and Forests Jairam Ramesh who currently holds the rural development portfolio, had stated the miners import equipment and other machinery even before the projects gets environmental clearances. “Ministry of Finance is apathetic towards the social and environmental aspects of mining. It is giving more sops to the mining industry,” says Chandra Bhushan, deputy director general at Centre for Science and Environment, a non-profit.

Coal excise duty waiver will help little

The move to free imported coal from excise duty has brought little cheer. Officials from the Coal India Limited (CIL), the largest coal miner of the world, and the power sector experts seem unfazed by the finance minister’s move to completely scrap taxes from imported coal for the power manufacturers. CIL and other experts reason that even then imported coal remains much expensive and the budgetary decision would not increase the imports.

A CIL official lauds the efforts of the FM saying that it is good incentive but due to large gap in the domestic and international coal prices, it will hardly have any effect. According to the official, foreign coal prices are 35 to 40 per cent higher than domestic prices. “The demand of 70-80 million tonnes of coal per annum would not change, as there would not be too many manufacturers going for the imported coal,” adds the CIL official.

Subscribe to Daily Newsletter :

SUPPORT US

We are a voice to you; you have been a support to us. Together we build journalism that is independent, credible and fearless. You can further help us by making a donation. This will mean a lot for our ability to bring you news, perspectives and analysis from the ground so that we can make change together.