Indian ferrous groups seek duty changes in union budget

Steel's inclusion under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme and a reduction in import duties for steelmaking raw materials are the top asks of Indian ferrous associations from the country's 2023-24 union budget.

India's finance minister Nirmala Sitharaman will present the union budget for the financial year 2023-24 on 1 February.

Industry bodies such as the Indian Steel Association (ISA), Federation of Indian Chambers of Commerce and Industry (FICCI) and the Federation of Indian Mineral Industries have recommended the Indian government to include the iron and steel sector under the RoDTEP scheme that will help the industry's competitiveness in the global market.

The government included iron and steel's chapter 73 items that includes tubes, pipes etc. under RoDTEP in December to boost exports, but the industry groups seek complete inclusion of the sector, especially chapter 72 consisting of top exported items such as semi-finished steel products, flat-rolled products etc. The RoDTEP scheme rebates or refunds the embedded central, state and local duties taxes to the exporters.

Duties to discourage imports

The ISA has also urged the government to impose anti-dumping and countervailing duties to prevent the dumping of certain steel products at predatory pricing.

It has further sought to reinstate the basic customs duty from the existing 7.5pc ad valorem to 12.5pc for flat steel and 10pc for long steel, as was the case before 1 February 2021. It has also sought imposition of a 25pc safeguard duty to counter imports in a Tweet today.

The steel association has further recommended a Border Adjustment Tax (BAT) which can be levied on finished steel imports to provide a level playing field for the domestic industry. BAT is a destination-based tax system where goods and services are taxed based on where they are consumed.

The call for increasing taxes on imported steel comes following the second-largest steel-producing country turning a net importer of steel during the October-December quarter.

Finished steel imports rose last month to their highest since August 2019, at 653,000t. That was an increase of 8.7pc on the month and a 65pc rise from a year earlier, joint plant committee data show. Firm demand in India during a global slump in global steel prices in the past months prompted countries such as Russia, Vietnam, Japan, Korea and China to export steel in the country.

But market participants and importers believe the volume of imports has not been high enough for the government to act on this recommendation, while free trade agreements with some of these countries will further deter the government.

Relief on raw material costs

Both ISA and FICCI have asked the government to reduce the import duty on coking coal and other raw materials, such as ferro-nickel and ferro-chrome, to zero.

The government brought back an import duty of 2.5pc on anthracite/pulverised coal injection, coking coal and ferro-nickel and of 5pc for coke and semi-coke on 19 November, which were removed in May.

Indian steel industry imports about 90pc of coking coal for steelmaking. Record-high coking coal prices in 2022 pushed domestic steel prices to an all-time high. Weather-related disruptions in Australia and China's impending return in the Australian coking coal market are expected to keep coking coal prices volatile. Coking coal from Australia is exempt from the import duty since 29 December following a free trade agreement.

The Material Recycling Association of India (MRAI) is urging the government to continue with the existing zero duty on ferrous scrap imports. The government last year extended the reduction in customs duty imposed on ferrous scrap and waste imports to zero until 31 March 2022.

Until India generates sufficient quantity and quality of scrap from the domestic market, zero import duty will help to create a level playing field for the Indian recycling industry, MRAI president Sanjay Mehta said.

By Sumita Layek