Budget provides impetus to steel with import duty cuts

The steel sector has plenty to cheer in the Budget 2012-13, as it has proposed increasing the import duty on flat-rolled steel to 7.5% and reducing duty on plant and machinery imports for iron ore beneficiation to 2.5%.

Finance Minister Pranab Mukheree has also reduced basic customs duty on coating material for the manufacture of electrical steel from 7.5% to 5%; and nickel ore and concentrate and nickel oxide from 2.5% or 7.5% to nil.

He also enhanced export duty on chromium ore from Rs 3,000 per tonne to 30% ad valorem.

Presenting the Budget today, Mukherjee proposed to enhance the basic customs duty on non-alloy, flat-rolled steel from 5% to 7.5%.

A long-pending demand of the steel makers, this move would discourage imports and thus and go a long way in protecting the interests of the domestic industry.

The domestic steel industry has also been demanding a blanket ban on iron ore exports and lending ear to their requests, the government has increased duty on iron ore exports to 30% for all kinds of iron ore within a year from as low as five%.

However, the Finance Minister did not go for hiking the export duty this time, in stead, he has proposed to provide incentives for beneficiation of iron ore domestically aimed at preserving the steel-making raw material.

"To encourage enrichment of low-grade iron ore, of which we have huge reserves, I propose to reduce basic customs duty on plant and machinery imported for setting up or substantial expansion of iron ore pellet plants or iron ore beneficiation plants from 7.5% to 2.5%," he added.

Mukherjee has also proposed to reduce basic customs duty on coating material for manufacture of electrical steel from 7.5% to 5%; and nickel ore and concentrate and nickel oxide/ hydroxide from 2.5% or 7.5%  to nil.

Enhancement of export duty on chromium ore from Rs 3,000 per tonne to 30% ad valorem would also augur well for the steel industry.