Industry body ASSOCHAM has urged the government to withdraw customs duty and countervailing tax on coal imports, mainly used in thermal power generation or coal based projects.

At present, imported coal attracts five per cent customs duty and countervailing tax, each.

In a note submitted to the Finance Ministry, the chamber has sought exemption of such taxes on coal as they increase the power tariff. Mr DS Rawat secretary general of ASSOCHAM said that "This distorts the field in favor of domestic coal based projects and discourages investments.”

The chamber said major countries like the US, Canada, Australia, Japan and Brazil do not levy customs duty on import of thermal coal.

Besides, independent power producers resorting to coal imports are adversely affected due to volatility in prices of imported coal, unpredictable long term pricing arrangements and infrastructural constraints.

It said that to bridge the demand and supply gap, the emphasis should also be on acquiring new mines abroad.

ASSOCHAM added that it is anticipated that shortage of domestic coal would continue to persist over the medium term as the additional coal generation program is not likely to catch up with the growing demand.

(Sourced from ET)