The budget proposal to reduce customs duty on certain items of steel and metal scrap has been welcomed by the user industries even as the primary steel producers claimed the measure would have little impact on them.
Primary, flat and long products of non-alloy and alloy steel will now attract 7.5 per cent duty instead of 10-12 per cent earlier, making import cheaper and, thereby, putting a leash on the rapid rise of steel prices which have caused discomfort for the user industries.
“MSMEs and other user industries have been severely hit by a recent sharp rise in iron and steel prices. Therefore, we are reducing customs duty uniformly to 7.5 per cent on semis, flat, and long products of non-alloy, alloy, and stainless steels,” finance minister Nirmala Sitharaman, said in her speech.
“To provide relief to metal re-cyclers, mostly MSMEs, I am exempting duty on steel scrap for a period up to 31st March, 2022. I am also revoking ADD and CVD on certain steel products,” she added.
Engineering Export Promotion Council (EEPC) India chairman Mahesh Desai said: “Our pleas with the government for reining in rising iron and steel prices have been heard and reflected in the budget. It is a great move for Aatmanirbhar Bharat and the MSMEs who had been hit hard for an unprecedented increase in the recent months.”
Benchmark steel prices have gone up over 50 per cent between June to January, backed by robust domestic demand and buoyant international prices. User industries who depend on spot prices instead of entering into long term contract with steel suppliers were taken in by the swift rise.
However, T. V. Narendran, MD and CEO of Tata Steel, said the move would have limited impact. “Exemption of duty on steel scrap and reduction of customs duty on steel products would benefit the MSME sector. However, the reduction of customs duty on steel products will have no significant impact on the steel industry as most of the steel imported into the country today comes from countries with whom we have an FTA (free trade agreement) and hence they enjoy zero import duty,” Narendran said.
Sanjay Budhia, MD of Patton, pressed for total duty abolition. “Customs duty on basic raw materials should be brought to nil so that India can be exporter of finished products and be part of the global value chain.”
“The revoking of anti-dumping duty and CVD on certain steel products along with relief to the copper recyclers and reducing duty on copper scrap from 5 per cent to 2.5 per cent would make a significant difference to engineering exporters,” Desai said.
