The government is considering customs duty waiver on coal imports to reduce the impact of a steep rise in the fuel's international price on mainstream power producers without raising electricity tariffs. The relief may come as part of the tax proposals in the Budget, officials said.
Power secretary P Uma Shankar made a strong pitch for the waiver at a recent meeting with revenue secretary R S Gujral on issues affecting the power sector, officials said. The proposal is also part of the tax sops recommended by a ministerial panel under power minister Sushilkumar Shinde set up to ameliorate sectoral woes.
Coal imports carry a 5% customs duty and an equivalent countervailing duty to offset the excise duty on Coal India Ltd's output.
Power producers supplying to the grid, especially those fully dependent on imported coal, have been pressuring the government to provide duty relief or increase tariff ever since international prices shot up.
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