Industry body Assocham has urged the government to withdraw customs duty and countervailing tax

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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.

"This distorts the field in favour of domestic coal-based projects and discourages investments...," Assocham Secretary General D S Rawat said.

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.

To bridge the demand and supply gap, the emphasis should also be on acquiring new mines abroad, it said.

It is anticipated that shortage of domestic coal would continue to persist over the medium-term as the additional coal generation programme is not likely to catch up with the growing demand, Assocham added.