Budget 2018 impact: Steel sector to see a marginal increase in fuel cost

The steel sector is likely to see a marginal increase in fuel cost, since the new Customs duty surcharge will affect the price of imported coking coal. 

The surcharge may also not help the domestic industry much, as it will be calculated on imported steel without including anti-dumping and safeguard duties, say sources in the sector. Currently, coking coal attracts Customs duty of 2.5 per cent.

According to an industry official, “The impact on us is not (going to be) huge. Any rise in Customs duty structure helps the domestic industry.” 

After the announcement in the Union Budget proposals, Sajjan Jindal, chairman of JSW Steel, had tweeted: “Replacing the education cess of 3 per cent on Customs duty with a surcharge of 10 per cent will have a net impact of 7 per cent. The cost of raw material for manufacturing is bound to go up and the industry will, in turn, transfer it to the end user.”

India imports nearly 85 per cent of its annual coking coal requirement of about 57 million tonnes. By the National Steel Policy, domestic coking coal requirements will more than double by 2030-31. The policy, announced last May, aims to increase the domestic availability of washed coking coal, to reduce import dependence on the raw material from 85 per cent to around 65 per cent by then.