Eliminate coal cess to support power-intensive industries: Assocham

Industry body Assocham has pitched for the removal of coal cess stating that the move will support power-intensive industries like aluminium and maintain competitiveness of the domestic industry.

In its pre-budget memorandum 2025-26, the industry body said that "high cess on coal (Rs 400 per MT)...be eliminated to support power-intensive industries."  Finance Minister Nirmala Sitharaman is likely to present the Union Budget 2025 on February 1, 2025.

The cess was introduced as Clean Energy Cess in 2010 with a levy of Rs 50 per metric tonne on coal.

It has been increased over the years from Rs 50 per metric tonne to Rs 100 per metric tonne in 2014-15, Rs 200 per metric tonne in 2015-16, and Rs 400 per metric tonne in the Union Budget 2016-17, it said.

The hike in coal cess has increased the production cost of aluminium many times, Assocham said.

It further said that the steep hike in coal cess has adversely impacted the sustainability of the aluminium industry being a highly power-intensive industry, where coal contributes to 32 per cent of the production cost of the silvery-white metal.

In India, the industrial power cost is very high despite having the fifth largest coal reserves.

Globally, major aluminium-producing countries are extending support to bring down the power and production costs.

A NITI Aayog report on 'Need for Aluminium Policy in India' also highlighted the challenges of high power costs for the domestic aluminium producers resulting in competitive disadvantage viz-a-viz global players.