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India Halves Tax On Coal, Increases Tax On Solar Panels


State-run Coal India Ltd, saddled with millions of tonnes of unsold coal, is expected to be the biggest beneficiary of a controversial government decision to more than halve the local sales tax on the fuel after a jump in local supplies.

The world’s third-largest greenhouse gas emitting country said last Friday it would lower the duty on domestic coal from July 1 and impose a new 18 percent tax on solar cells and modules as part of a broader tax overhaul.

The moves are seen as helping boost sales of the fossil fuel mined locally and used mainly in thermal power plants. But imports of high-quality coal which are scarce in India and used in the steel making process by companies such as JSW Steel and Tata Steel will become expensive following changes to the duty structure.

The duty revamp under the national India’s Goods and Services Tax (GST) could also hurt the young and booming solar power industry, which relies heavily on cells and modules imported from China.

Output by Coal India, the world’s largest coal miner that mainly produces low-grade coal for power companies, has expanded rapidly as the government speeds up environmental and other approvals as part of its efforts to provide electricity across the country. However, highly indebted power companies struggled to match the same growth rates.

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