Govt levies 5% import duty on steel products

The government has imposed an ad valorem import duty of 5 per cent on pig iron, semi-finished, flat and long steel products. An import duty of 20 per cent has also been imposed on crude soybean oil with immediate effect.

The domestic steel industry had been lobbying for a 10 per cent import duty to discourage imports and provide support to the falling domestic prices. Cheaper steel import, they claimed, was contributing to their sagging sales. Leading steel companies like Steel Authority of India (SAIL) and JSW have witnessed a 25-30 per cent dip in consumption demand. Consequently, most producers have decided to cut output by 25-30 per cent.

In a press statement, the finance ministry, said these measures were introduced, "in the wake of the recent fall in the international prices of commodities and with a view to safeguard the interests of domestic producers".

At present, both iron and steel items like pig iron, semi finished, flat and long steel along with crude soybean oil enjoy complete duty exemption.

However, industry experts said the import duty is not going to provide any relief against cheaper imports. Companies in Ukraine and China are offering steel at a price of $430-440 a tonne (FOB) and a large number of contracts are taking place. At the current rupee-dollar exchange rate, this translates into Rs 21,300-21,800. The price at a consumption site would come to around Rs 23,300-23,800 after incurring port clearing and inland freight charges. By contrast, the domestic steel is selling for Rs 34,000 a tonne (ex-mill), said trade sources. A five per cent duty would push the cost of imported steel by nearly Rs 1,100 a tonne, while the gap between imported and domestic steel price is about Rs 10,000 a tonne.

“By imposing this duty, the government has accepted the industry’s demand, though partially, and at the same time ensured that cheaper import continues,” said trade sources.    

Domestic steel producers had taken a price cut of 12-14 per cent or Rs 5,000-5,500 a tonne earlier this month to boost sales. However, the situation has not improved so far and producers might have to go for another round of price cut.

In order to simplify the refund-based service tax exemption scheme on taxable services attributable to exports, the time limit for filing refund claims has been extended from 60 days to six months. In respect of technical testing and analysis service, the documentation required for claiming refund has been simplified.