India will halve the import tax on liquefied natural gas as it seeks to promote use of the cleaner fuel and boost its share in the country's energy mix.
Import tax on the super-chilled fuel will be cut to 2.5 percent from 5 percent, Finance Minister Arun Jaitley said in his budget speech last week. The development pushed up shares of Petronet LNG Ltd., the nation's biggest importer of the fuel, as well as state-run gas marketer GAIL India Ltd. India is seeking to increase the share of natural gas in its energy mix to 15 percent by 2020 from 6.5 percent at present.
"Lowering import taxes will increase the competitiveness of the fuel," said E.S. Ranganathan, managing director of Indraprastha Gas Ltd., a natural gas distributor in New Delhi.
Spot LNG price in Singapore has risen about 50 percent over the past year, making the fuel too costly for many consumers. The cut in taxes will partly offset the impact of the price increase, benefiting users such as fertilizer companies and steel mills. Power producers have been exempted from the import tax since 2012.
"The step is an indication that the government wants to encourage use of cleaner fuels, but they could have waived the duty altogether," said Debasish Mishra, a partner at Deloitte Touche Tohmatsu LLP in Mumbai.
SundayMonday Business on 02/05/2017