Power is essential to fuel the economic growth of India. An uninterrupted and reliable power supply is a must for keeping up the pace of development in India. Electricity is not only essential for industries and commercial establishments but also for households and agricultural purposes. But the country faces roadblocks in its attempts to unleash the full potential of India’s power sector. One of them being concerns towards fuel availability encountered by the industry.
India is experiencing a lack of coal supply in the domestic market. Accordingly, power plants are compelled to import coal to meet their energy requirements. Since there are no taxes on electricity on the output side, any duty imposed on the procurement of coal forms a cost for the power companies. The burden of such increased cost is ultimately borne by the end consumer. Further, multiple operational inefficiencies and outstanding debts have led to a poor financial health of India’s power sector.
Currently, basic customs duty (BCD) at the rate of 2.5 percent is levied on import of coal. It is crucial that the BCD rate on coal is reduced to nil in the upcoming Budget 2018-19, so as to bring down the cost of production of electricity and to revive the sector from debt. Another welcome move that could boost the power sector would be a lower GST rate on coal which is currently taxed at 5 percent. Read More…
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