The Hindu Business Line : ‘Export tax on steel may affect auto part makers’

New Delhi, May 22 The Government’s attempt to curb steel exports to ensure its availability at a reasonable price in the domestic market may also affect auto parts companies who export castings and forgings.

Alarmed by the impact of the Government’s decision to impose export tax on steel intermediaries (which are semi-finished products), that would impact auto part companies, the Automotive Component Manufacturers Association (ACMA) has sought an amendment that would exclude levies on such products.

At present, exports of fully machined components do not attract such taxes. But semi-finished products fall under the recent policy of export duty on raw steel and intermediaries. On the grounds of the product not being raw material, but an intermediary to the finished product, ACMA has written to the Steel Ministry seeking clarification. It has stated that the Government’s notification, which includes value-added steel-based products, has resulted in levy of export duty on rough iron and steel castings sold by some of the component companies overseas.

“The Government’s decision affects companies like Bharat Forge that are exporting rough forgings out of non- alloy steel,” said a senior industry official who declined to be quoted.

However, he explained that companies exporting machined products don’t get affected.

“Auto component producers exporting semi-finished castings and forgings, which are meant for automotive exports, are being affected.

This would have an adverse impact on the companies’ exports and the targets laid down in the Automotive Mission Plan,” said Mr Vishnu Mathur, Executive Director, ACMA.

The association has sought clarification or a necessary amendment in the clause so that auto component companies’ exports do not stand at a disadvantage, said Mr Mathur. In the letter to the Steel Ministry, the association expressed its concern stating that “while the main objective of the Government was to discourage steel exports of the basic steel raw material in view of the steep rise in steel prices since January 2008, customs are now imposing export duty on rough iron and steel castings that are being exported to vehicle manufacturers and tier I suppliers under global sourcing contracts.”