Date: October 22, 2008
Ref. No. MPML/PMS/184/2008
Steel Companies May Get Import Duty Shield
"THE government may soon provide protection to domestic steel companies by levying a 10% import duty on all grades of steel."
"Rising steel prices earlier this year had prompted the government to not only withdrew import duties but also levy export duty on certain steel products to improve its availability ion the domestic market. "
"The steel package to be approved by the Steel Ministry is also likely to recommend complete withdrawal of export duty on steel products."
THE government may soon provide protection to domestic steel companies by levying a 10% import duty on all grades of steel. The steel ministry, which is finalizing a new fiscal package for the sector, is understood to have favored higher import duty on steel to protect the industry from cheap imports from countries such as China and Ukraine. As of now, steel import enjoys complete duty waiver.
It is also likely to suggest re-imposition of 14% countervailing duty (CVD) on bars and structurals (primarily Tor steel) and reduction in excise duty on Tor steel and galvanized products from the present 14% to 8% level. The ministry is expected to submit final set of proposals to the finance ministry for approval early next month.
"We are planning to recommend to the finance ministry that a levy of 10% import duty should be imposed on all steel products. While the industry has sought a higher import duty protection of 15%, a lower level has been favored, as this would not require Cabinet approval and a mandate from the Parliament. The matter is still being discussed in the ministry and recommendations may be finalized early next month," an official source said.
The government levied 5% import duty on steel prior to its withdrawal in early this year as part of the inflation management exercise. Rising steel prices earlier this year had prompted the government to not only withdrew import duties but also levy export duty on certain steel products to improve its availability ion the domestic market.
The re-imposition of import duty has now been favored as steel prices have fallen sharply from a high level of $1,400-1,500 per tonne just a few months back to around $700-800 per tone. The price of input, especially coking coal, has however, remained firm.
The steel package to be approved by the steel ministry is also likely to recommend complete withdrawal of export duty on steel products like bars and structurals (used in housing and construction activities), pig iron, sponge iron and semis like blooms, billets and plates. These products were left out when government withdrew export duty on flat and galvanized steel products recently. Moreover, it is likely that CVD would be reimposed on bars and structurals where this duty was withdrawn in support of the needs of the construction sector.(Source: - Economics Times)