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Alloy producers who utilise chrome got a boost from the budget. Indian exports of chromium will be charged an ad-valorem rate of 30 per cent on sale price. Currently exporters pay a flat charge of Rs 3000. Chromium is utilised by producers such as Tata Steel, Jindal Stainless, Indian Metals & Ferroalloys are some who utilise chromium. This could lower domestic prices and improve availability of chromium ore .
Following up on last year's move to exempt iron ore pellets from export duty, The Budget lowered the import duty on plant and machinery bought for setting up a pellet-making unit from 7.5 per cent to 2.5 per cent. Setting up a pellet plant cost around Rs 300-400 crore per million tonnes. SAIL, Essar Steel, JSW Steel are a few companies setting up plants to utilise iron ore fines. On the long run, pellet making could reduce dependence on expensive iron ore lumps. Margins could receive a boost from utilising more reading available iron ore fines and tailings. International iron ore fines sold at 20 per cent lower rates than higher grade lumps. Domestic producers could pick up fines at even cheaper prices. Tailings are unused mining residue and iron ore miners like SAIL and NMDC have plenty of it. Both are cheaper input than iron ore lumps.
Domestic flat steel producers
Another move which is likely to aid domestic flat steel producers is the hike in import duty on non-alloy flat steel from 5 per cent to 7.5 per cent. With large domestic flat steel capacity additions expected over the next two years, the hike provides a narrow margin of protection for domestic producers against Chinese and East-European steel imports.
Domestic miners looking at Greenfield and Brownfield mine additions also received a fillip as the import duty on equipment destined for exploration and extraction of ores from the current 7.5 and 10 per cent to 2.5 per cent. Coal miners have been exempted fully from this charge as the Government hopes this will provide a small incentive on the capital expenditure front for new mines.
One per cent tax
It has also been mandated that the sellers collect a one per cent tax from buyers of iron ore, coal and lignite at source. This applies only to buyers whose intention is ostensibly to export the ore. The Government hopes this will result in better monitoring of exports and eliminate illegal transactions in the segment.
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