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The Union Budget 2011-12 has brought cheer to the domestic steel industry with a slew of positive measures for the industry.
The Government has finally accepted the longstanding demand of the domestic steel industry and taken a move to curb iron ore exports. The Finance Minister, Mr Pranab Mukherjee, on Monday announced that a uniform 20 per cent export duty will be levied on iron ore fines and lumps while the statutory rate has been increased from 20 to 30 per cent.
“Higher export duty on iron ore has been a long pending demand of the steel industry and the Budget has taken care of the issue by increasing the export duty to 20 per cent. This should ensure higher availability of iron ore for the Indian steel industry,” said the SAIL Chairman, Mr C.S. Verma.
Industry friendly move
Mr B. Muthuraman, Vice-Chairman, Tata Steel added, “The hike in export duty on iron ore is a positive move for the domestic steel industry even as the sector was looking for a complete ban on exports. Iron ore is a finite resource and we need to preserve it for value addition within the country. The hike in export duty would ensure higher raw material availability to domestic steel producers.”
The Government has also decided to withdraw the export duty on pellets. This is expected to invite more investment into pelletisation plants. “Withdrawal of export duty on pellets should encourage installation of pellet plants by mining companies. More pellet plants in the country will also benefit the steel industry,” said Mr Verma.
There was more good news for steel makers. The Government announced a full exemption from basic customs duty on stainless steel scraps in order to help boost production of stainless steel in the country.
“The reduction of customs duty on stainless steel scraps is a welcome move since it is expected to boost the production of stainless steel in the country. The stainless steel segment of steel industry will also benefit from the reduction of customs duty on nickel, thereby making a positive impact on domestic production,” said Mr Verma.
The move to cut customs duty on stainless steel scrap and ferronickel, both key ingredients in making the rust-proof alloy, will help the industry boost profitability, JSL Stainless Ltd's, Director of Finance, Mr Arvind Parakh said.
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