World Economy

India Steel Industry Seeking Higher Customs Duty

India Steel Industry Seeking Higher Customs DutyIndia Steel Industry Seeking Higher Customs Duty

India’s steel industry, in a latest move, has demanded the basic customs duty on all steel imports to be raised to 25%, from the current 10%.

India is the third-largest steel producer in the world. In 2015, India produced 91.46 million ton of finished steel. Total finished steel production in the country increased at a compound annual growth rate of 7.45% over FY011–15.

Driven by rising infrastructure development and growing demand for automotives, steel consumption is expected to reach 104 MT by 2017. India’s steel production is expected to increase from 100 MTPA to 112.5 MTPA by FY16 and 300 MTPA by 2025, Rediff reported.

The government of India has allowed 100% foreign direct investment in the steel sector under the automatic route. Nearly 301 MoUs have been signed with various states for planned capacity of about 486.7 MT.

The industry demands the basic customs duty on all iron and steel imports to be raised to 25%, from the present rate of 10% on long products and 12.5% on flat products.

In view of the continued economic slowdown in the country which had an adverse impact on the steel sector as also keeping in view the investments undertaken by domestic steel producers in anticipation of an increase in consumption in the country, there is an urgent need to provide protection to the domestic industry.

During April-August 2015, India imported 4.5 million tons of steel as compared to 2.9 million tons during April-August 2014 registering a whopping 51% growth. Exports, on the other hand, fell by 28%, and were 1.76 million tons against 2.4 million tons in the same period.

Import duty on manganese ore, chrome ore, molybdenum ore, vanadium oxides, hydroxides and other salts of oxo metallic acids (vanadium oxides concentrates and ammonium meta vanadate) are to be reduced to zero from the existing 2.5%.

Duty on coking coal should be exempted. Import duty on coking coal was increased to 2.5% in the Union Budget 2014-15.

Coking coal, steam coal and met coke are key inputs in steel making and account for substantial portion of cost of production for steel.

Basic custom duty on LAM coke will be increased from 5% to 10%, it said. LAM coke is a value added product and made from coking coal at various captive and merchant coke oven plants for onward usage for metallurgical purposes mostly in blast furnaces for steel making. Devaluation of its currency by China has made its imports very cheap and Indian coke oven plants are incurring losses.