Home / Politics / Policy /  Centre may revise steel export duties

NEW DELHI : The government may soon revise levies on steel exports, cutting them on some products and withdrawing the tax on others, two people aware of discussions said.

The revision to the taxes imposed on 22 May is being considered to allow the steel industry to tap overseas markets amid declining domestic demand and the risk of export opportunities drying up because of possible recessions in Europe and American markets.

The steel ministry took up the issue with the finance ministry after receiving several representations from the steel industry in June, the people said, requesting anonymity.

“Deliberations on duty review have been completed recently, and the revisions may be notified soon," one of the people said.

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Central Board of Indirect Taxes and Customs (CBIC) chairman Vivek Johri said, “We have received representations because there has been a change in price trends. They are under examination".

While the CBIC chairman did not elaborate on the possible changes, the two people privy to the development said the 15% export duty on some steel products might be halved or abolished for some products.

Mint reported on 5 August that the finance ministry is examining duty cuts for the steel sector after reviewing the price trends in the domestic and overseas markets. The ministry sought more data from industry to complete its analysis before deciding to revise export levies.

A query sent to spokespeople for the finance and steel ministries on the duty review remained unanswered till the time of going to press.

In May, the government imposed an import duty of 15% on select steel products, including pig iron, flat-rolled products of both carbon steel and stainless steel, bars, rods, and non-alloyed steel, to check rising steel prices and rein in inflation. The duty changes were also made for iron ore pellets, where a 45% export duty was imposed while export duty on iron ore and concentrates was raised to 50% from 30%. “As a result of the export duty, the domestic price of benchmark hot-rolled coils fell over 26% from a record 76,000 per tonne in April to just about 56,000 per tonne now. In the absence of a big pick-up in domestic demand, steel firms are now saddled with rising inventory and face the prospect of hurting margins in the absence of an alternative outlet," a top executive at a leading steelmaker said, asking not to be named.

“The Ukraine-Russia conflict had opened doors of European markets, but the duty has made steel prices uncompetitive. So, a duty revision even now will help the sector without adding to inflationary pressure," he added.

The export duty has restricted steel exports, which have fallen from 1.5 million tonnes (mt) in April to just over 500,000 tonnes in July. Iron ore exports have also fallen 69.1% in April-July. Despite a fall in exports, domestic consumption has not increased. The government imposed an export duty on several commodities in May to check price rise. The industry exported a record 13.49 mt of steel in FY22, a growth of 25% from the previous year amid a rise in demand and prices. The trend continued in the early months of this fiscal, but things changed thereafter as domestic demand fell.

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