Kolkata, Feb 26 (IANS): Coal consumers raised concerns of raising costs due to the hike in freight base rates in Railways Minister Suresh Prabhu's maiden budget as he emphasised on the need to improve quality of railway services and plans to improve the freight sector.

"According to experts, the increase in freight for coal may lead to around 2.5 to 3 percent increase in cost of coal at the consumers' end," said Coal Consumer's Association of India secretary general Subhasri Chaudhuri.

She said freight charges comprise of 20 to 40 percent of the price of coal and with the freight hike of 6.3 percent on coal, the industries using the black mineral will be direly affected.

"While iron and steel freight was hike by 2.7 and 0.8 percent, coal shot up to 6.3 percent - the highest in this category," she said.

According to her, the resultant hike will pull up costs for companies using coal which will ultimately drill down to retail prices. A small to moderate hike in cement, power, steel, rayon and chemicals is likely.

"Coal consumers are already burdened with additional levies like Busy Season Surcharge, Congestion Surcharge etc which has already impacted the industrial growth," she said.

However, with freight improvement topping the agenda of the railway budget this year, Chaudhuri said: "As evacuation of coal is a major bottleneck, such measure is expected to ease the constraint."

Asked over alternate sources of energy to restrain use of coal, she noted that alternative fuels like solar power will take time and industries will continue to depend on coal for the time being.