New Delhi, Feb 28
Budget 2006-07 has announced 2.5 per cent reduction in customs duty on alloy steel and primary and secondary non-ferrous metals, from 10 per cent to 7.5 per cent.
The import duty for other ferro-alloys has also been brought down from 10 per cent to 7.5 per cent.
However, owing to demand from some domestic associations, the import duty on steel melting scrap has been increased from zero to 5 per cent, the same as primary steel.
Presenting the Budget in Parliament on Tuesday, Finance Minister Mr P. Chidambaram said, "In 2004-05, in view of the high international prices of steel, I had reduced the import duty on steel melting scrap to zero. With prices of steel coming down, I propose to restore the duty to 5 per cent and bring it on par with primary steel.
"The duty on mineral products is now 15 per cent. I propose to reduce it to 5 per cent, with a few exceptions. I also propose to reduce the duty on ores and concentrates from 5 per cent to 2 per cent," the Minister said.
Refractories and certain raw materials used to manufacture refractories currently attract 10 per cent import duty. The Finance Minister also proposed to reduce these duties uniformly to 7.5 per cent.
Mr Sheshagiri Rao, Director (Finance), JSW Steel: For the steel sector, there is benefit from the larger growth thrust in the Budget with its emphasis on infrastructure and rural projects. But the sector itself has not been specifically addressed. We had asked for a reduction in excise duty on steel for construction purposes, from 16 per cent to 8 per cent.
That has not come through. Otherwise, the revision in duties has had a neutral effect. In line with peak customs duty, the new rates for limestone and certain items like cathodes, is 12.5 per cent. Duty on zinc has fallen to 7.5 per cent. But then scrap, which used to have nil duty, has moved up to five per cent.
Mr Rajesh Shah, Managing Director, Mukand Steel: The import duty on alloy steel has just been reduced by 2.5 per cent. In the current context, it doesn't make much of a difference.
The industry had brought to the Government's attention the problem of low priced imports. Chinese companies had dropped prices; now they are making losses and may therefore sell at higher prices from March. But it is possible that some of the steel manufacturers, in line with norms, could lodge complaints of dumping.
Mr B. Muthuraman, Managing Director, Tata SteelWhile we have yet to assess the full impact of Budget, it appears marginally positive for the steel sector with the reduction in peak Customs duty on non-ferrous metals, ferro alloys, refractories, and minerals, and simplification of FBT.
De-blocking of coal blocks of 20 billion tonnes of coal is a welcome move. The Finance Minister has indicated that a comprehensive new policy on coal is being framed; we are hopeful that it will take care of the requirements of the steel industry too.
- Our Mumbai Bureau