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The Steel Ministry has proposed the removal of import duty on key steel-making raw materials — coking coal, anthracite, met coke, ferro nickle, limestone, manganese ore, and chrome ore — while batting for lowering of duty on graphite electrodes in the upcoming Budget 2023-24.
The revenue implications on the exchequer are pegged at nearly ₹3,700 crore, documents accessed by businessline show. Domestic unavailability, low reserves, and the need to lower the cost of production for steel mills are being cited as reasons for the removal of duty.
India, the second largest producer of crude steel globally, is also one of the highest importers of coking coal. Revenue of coking coal imports stood at ₹1,02,791 crore in FY22, the Ministry documents state.
Fresh proposal
Fresh proposals, which have a revenue implication of ₹486 crore, includes a full waiver of duty on limestone. Limestone or dolomite is used to maintain slag basicity (a key part of the steel-making process). Import duty stands at 2.5 per cent.
Manganese ore used to make manganese steel (a product variety) and chrome ore, used for making synthetic rubies (another part of steel making), both have a 2.5 per cent basic customs duty. A full waiver has been recommended.
Graphite electrodes — that finds usage in electric arc furnace of steel production — have a 7.5 per cent duty. The suggestion is to bring it down to 2.5 per cent.
Further reduction
The Ministry has pointed out that duty on some steel-making raw materials, like coking coal, anthracite, met coke, ferro nickle, and lam coke were nil in the May-November 2022 period.
This was the time when the Centre had imposed a 15 per cent duty on steel exports. It also brought down import duty on some raw materials. However, import duties were brought back post removal of the export levy last month.
For instance, coking coal, anthracite, and ferro nickel imports all have a 2.5 per cent import duty now, and met coke and lam coke imports are at 5 per cent, respectively. However, documents accessed show that the Steel Ministry is now thinking of bringing down import duty on these to nil again. The cost implication because of this is pegged at ₹3,198 crore.
Other suggestions
The Ministry has also recommended that liquefied natural gas and steam coal — that are used in steel-making and other core sector industries — also have nil duty. Steam coal has a 2.5 per cent basic customs duty, while liquefied natural gas has a duty of 5 per cent.
On the other hand, the Ministry wants to continue with the nil or zero duty regime for the import of stainless steel and ferrous scrap, and also on the import of raw materials used in making cold rolled grain oriented (CRGO) steel. The nil import duty on both these categories was set to end on March 31, 2023.
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