| Date: |
23-01-2015 |
| Subject: |
Steel and mines ministry seeks pre-budget hike in import duty on finished steel |
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KOLKATA: The union steel and mines ministry has sought an immediate hike in import duty on finished steel to 10% from the present level of 5 to 7.5% and a withdrawal of duty on raw materials like, iron ore and coking coal in the light of surging steel imports.
While these have been part of its Budget recommendations, the move gathered significance recently with the ministry shooting off an urgent letter to the finance ministry to implement a pre-Budget change in duty rates.
The move, if implemented, will bring much needed cheer to domestic steelmakers grappling with rising imports and scare raw materials, the ministry's suggestion against lowering export duty on iron ore will disappoint the mining sector players.
The Budget proposals were sent to the Finance Ministry as part of its budget recommendations late last month.
Steel imports grew by 58% during April-December 2014, even as exports fell by 6.6 % in the same period. In contrast, domestic steel consumption has shown a lacklustre growth of 1.4% in the first nine months of the current fiscal.
The domestic steel industry has been urging the government to take measure to restrain steel imports, which have surged in the past months. A hike in import duty on finished steel is likely to check imports from China, which is facing an economic slowdown.
However, a huge quantity of steel is also being imported from countries like Japan and Korea, due to the free trade agreements between India and these countries that allows preferential tariffs.
On the raw material side, withdrawal of import duty on iron ore and coking coal will come as a huge benefit for domestic steelmakers who are facing problems in sourcing iron ore due to the mining problems. Rupee depreciation has also emerged as a threat for steel companies which have had to resort to imports of iron ore, in addition to coking coal imports.
Removal of import duty will thus help Indian steel companies contain production costs and make them more competitive both in the domestic and export markets.
However, if implemented, the ministry's suggestion will disappoint mining industry players who have been demanding a reduction in the 30% export duty on iron ore.
Source : economictimes.indiatimes.com
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