New Delhi: Stepping up its efforts to control rising steel prices, the government is likely to impose up to 15% export duty on various steel products, including those used exclusively for construction purposes.
“More than flat products, there is scarcity of long steel products and as such there is an express need to contain their prices. There is clearly a case for imposing export duty on both flat and long products like bars, rods etc,” an official source told PTI.
“As part of the move, the government is also planning to impose 10% duty on export of flat steel products used by automobile sector and 15% on long steel products like TMT bars, rods, wires and galvanised plain and corrugated steel sheets,” the source said.
The Finance Ministry is understood to have approved a slew of measures for containing the upward spiral in steel prices after harping on a ‘revenue-neutral model´ to offset the losses to the exchequer on account of these measures.
A notification to this effect from the Finance Ministry is expected this week.
Interestingly, the government is planning to impose export duty on galvanised sheets as the earlier suggestion from the Steel Ministry was to levy duty on flat and long products.
Steel prices have risen by up to 49% during the past one year and recently most companies, barring state-run steel giant SAIL and world’s cheapest steel maker Tata, have started levying raw material surcharge of Rs5,000 to somewhat offset their input costs.
However, the steel industry is maintaining that imposition of export duty would not address the demand-supply mismatch of the alloy in the domestic markets.
“There is enough availability of flat products in the country and if export duty was imposed, then we would divert surplus production to local markets. Are these markets adequately geared up to absorb these products? If not, then what happens?” a steel industry official asked.
However, any imposition of 15% valorem duty on iron or export is unlikely as the Ministries of Commerce and Mines are understood to have opposed such move saying it would trigger the downfall of the mining industry.
The steel industry is however categorical in demanding export duty on ore saying future shortage of the mineral could jeopardise their capacity expansion plans.
The new National Mineral Policy 2008 also envisages developing mining as a standalone industry and attracting FDI worth crores of rupees to develop the sector.
The Indian Steel Alliance, the umbrella body of leading steel utilities has argued that in view of limited reserves of iron ore the export of the mineral be either canalised or disincentivised to ensure availability of the mineral for domestic steel utilities.