ArcelorMittal’s Indian joint venture has asked New Delhi to remove import tax on liquefied natural gas (LNG) for steelmaking to help the company cut its production costs and meet decarbonisation targets, a letter seen by Reuters showed.
Steel production accounts for about 8% of global carbon emissions. Replacing coal as a fuel source with LNG can eliminate some of these emissions, but increases production costs.
“To meet the domestic and international demands for steel, we propose to implement zero duty rate on imports of LNG for steelmaking,” ArcelorMittal Nippon Steel India (AM/NS India) said in a letter dated September 2 to the federal finance ministry.
India, the world’s second-largest crude steel producer, levies a basic customs duty of 2.5 percent and an additional welfare cess of 0.25 percent on LNG.
If the government grants AM/NS India’s requests, other steelmakers like JSW Steel and Tata Steel would also benefit.
The federal finance ministry and AM/NS India did not respond to Reuters emails seeking comment.
In a report released this month, the steel ministry said natural gas was “significantly expensive.”
India’s steel industry is responsible for 10-12% of its total emissions, with 2.54 metric tons of carbon dioxide generated for every ton of steel, which is higher than the global average of 1.91 metric tons per ton of crude steel.
India, the world’s third-largest emitter of greenhouse gases, has pledged to achieve a net-zero carbon emissions target by 2070. New Delhi also aims to increase the share of natural gas in its energy mix to 15 percent by 2030, from around 6 percent currently.
AM/NS India has also urged the government to include natural gas under the Goods and Services Tax (GST) regime to make prices cheaper and uniform across the country.
“This situation (LNG is outside the purview of GST) potentially leads end-users to prefer imported products over more expensive domestic products, thereby undermining ‘Make in India’,” he said, referring to India’s ambitious plans to turn it into a global manufacturing hub.
By introducing GST, India replaced around 20 federal and state taxes to unify the country’s economy of around $3.2 trillion.
The GST Council, comprising state finance ministers and chaired by the federal finance minister, is required to approve and set tax rates for LNG.
(Only the headline and image of this report may have been reworked by Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First published: September 17, 2024 | 17:40 IS
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