Indian Govt to increase customs duty on iron & steel products
2 March 2015
The government has decided to increase the custom duty on iron and steel from 10 to 15 per cent, if necessary, in order to give a boost to the local manufacturing sector. The special additional duty (SAD) on steel scrap, which is used as a raw material by stainless steel industry, was also halved from four per cent to two per cent.
"Increase in the import duty on steel will help improve the competitiveness of the domestic steel industry," said T V Narendran, managing director (India and southeast Asia), Tata Steel.
Amid the concerns of China and other countries dumping huge amount of finished iron and steel products in India, the custom duty increase is small but significant. However, the stainless steel sector has not got any such relief.
"We had hoped that keeping in view the large-scale dumping taking place, basic custom duty on finished stainless steel products would have been increased," said Rajiv Rajvanshi, senior vice-president (corporate strategy) at Jindal Stainless.
Notably, the government has not touched the basic custom of duty of steel scrap, which is at 2.5 per cent. Rajvanshi said the government should have removed this basic custom duty, too. "Both these steps (increase in custom duty on finished products and removing custom duty from steel scrap) are necessary to align the industry to 'Make in India' concept and provide impetus to the manufacturing sector," he added.
While steel companies were expecting much more from the government, the government's decision to set up five ultra mega power projects and launch similar projects for roads, rail and ports has given them hope.
"All these measures will see a boost in demand for construction materials such as steel and cement, which have witnessed subdued growth on account of sluggish global as well as domestic market conditions in the recent times," said C S Verma, chairman, Steel Authority of India.