The hike in clean energy cess is likely to impact the input cost for steel manufacturers, Deepak Agrawal, Chairman of the Sub-committee on Steel of the MCC Chambers of Commerce & Industry said, adding the chamber would request the government to reconsider the same.
Agrawal said that the impact would be more on small and medium players in the industry. “In the era of lukewarm demand, there is no scope for price increase and, thus, the extra burden of cost has to be absorbed by the industry. The government should not have increased the cess. The steel industry is the worst sufferer,” he said.
Incidentally, coking coal is one of the main inputs for cement and steel manufacturers, which would see a rise in total raw material costs due to the hike in the Green cess. A hike in the clean energy cess on coal to Rs 400 per ton of coal mined from the existing Rs 200/ton was announced in the Budget. It is for the third time in a row that the clean energy cess has been increased as part of the Budget announcements.
As per one expert report, steel production by 2016-17 is projected to touch 105 mt. The corresponding requirement of coking coal for this quantity of steel is worked out to 67.2 mt in 2016-17.