'Raise drawback rates to make up for steel import duty hike'

Engineering exporters' body EEPC India today said the government should increase duty drawback rates to make up for the recent hike in basic customs duty (BCD) on certain steel products.
It has cautioned that exports were bound to be hit unless government hikes the duty drawback rates, as steel accounts for nearly half of total value of engineering products exported.
"Government's move to protect domestic steel industry through hikes in import duty and the consistent efforts for anti-dumping measures should go hand in hand with commensurate increase in the duty drawback to exporters, else engineering exports this fiscal may fall well short of USD 71 billion achieved in 2014-15, EEPC India Chairman Anupam Shah said.

The government had recently hiked the import duty on flat products of steel, used in automobiles, refrigerators and washing machines etc, from 7.5 per cent to 10 per cent.
Likewise, on long products like TMT bars, the levy was raised to 7.5 per cent from 5 per cent.
"The current Duty Drawback rate is around 1.9 per cent, which should be increased by 60 per cent of the import duty hike. The government has raised the import duty on both flat and long products by 2.5 per cent. However, no duty drawback rates were increased.

"Since, on an average, steel accounts for about 50 per cent of total value of engineering products, the duty drawback rates for engineering products should have been raised by 1.25 per cent at the bare minimum," Shah said.

The hike in import duty was expected to help domestic steel producers who are battling cheap imports from countries such as China and Korea.
"We are not against support to the domestic industry against imports from countries like China, but then, with the domestic prices being influenced by such levies, the drawback rates should simultaneously go up," Shah said.
The exports of engineering products, one of the essential groups of India's export basket with 24 per cent share in the overall merchandise shipments, fell by 10.5 per cent to USD 5.4 billion in May, 2015 over the year-ago period.
"Going forward, it looks difficult to achieve the last year's level if immediate measures are not taken to help exporters by way of increased duty drawback and other measures," Shah said.

Last month, India had slapped anti-dumping duty of up to USD 316 per tonne on imports of certain steel products from three countries, including China, to protect domestic producers from below-cost inbound shipments.