The >steel sector has had a rough time of it, with steel consumption witnessing a 2 per cent decline in the year to September 2012 and recent GDP estimates suggesting a sluggish economy. The industry is looking to the Budget to give a boost to infrastructure building to boost steel demand.

To ward off the import threat, the industry also wants the customs duty on stainless steel flat products to be raised from 5 per cent to 15 per cent and on hot briquetted iron (HBI)/direct reduced iron (DRI) products from 5 per cent to 10 per cent.

There is also a demand for excluding steel from the free trade agreements with Japan and Korea to keep a check on imports.

There is a demand for import duties on raw materials, iron ore (2.5 per cent) and limestone and dolomite (5 per cent each) to be done away with.

Iron ore constitutes about 24 per cent of the operating cost of steel manufacturers using the blast furnace route and about 33 per cent for those using the induction furnace route.

While coking coal is exempt from customs duty, there is ambiguity on what qualifies as coking coal in the notification.

So, the industry is asking for a blanket exemption on duty for ‘all coals used in iron and steel industry’.

The changes may not materially affect SAIL, which has captive sources of iron ore, limestone and dolomite and Tata Steel (India operations), which meets its entire iron ore requirement and 60 per cent of coking coal needs through captive sources.

However, most of the other steel manufacturers do not have captive raw material sources and any changes in duty will, therefore, be greater for them.

The mining industry’s demand from the Budget is that it refrain from any further taxes or duties on mining. The sector has seen output falling by 2.6 per cent for the first nine months of this fiscal. The demand for halving of export duty on iron ore fines, if it comes through, will lift margins for NMDC and Sesa Goa.

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