Ministry seeks hiking of import duty on finished productsNew Delhi: The mines and steel ministry has sought import duty hike on finished steel products to 10 per cent, besides complete withdrawal of the levy on imports of steel-making inputs such as iron ore
New Delhi: The mines and steel ministry has sought import duty hike on finished steel products to 10 per cent, besides complete withdrawal of the levy on imports of steel-making inputs such as iron ore and coking coal in the coming Budget.
In a communique to finance minister Arun Jaitley, steel and mines minister Narendra Singh Tomar, however, did not pitch for slashing export duty on iron ore in order to ensure long-term raw material security for the domestic firms.
Sources said these Budget proposals were sent to the finance ministry towards the end of last month. Tomar has also clarified some issues regarding the Budget proposals in a meeting with Jaitley earlier this week.
The import duty hike to 10 per cent on finished steel products which now ranges between 5 per cent and 7.5 per cent and the complete withdrawal of import duty on inward shipments of raw materials would provide a huge relief to the domestic steel makers.
Domestic steel makers are fearing further squeeze in the margins in a stubbornly subdued domestic market with the rise in imports and decline in exports. The situation arises mainly out of higher input costs.
However, with tepid growth in domestic consumption, they are not in a position to raise prices. While imports grew by 58 per cent during the April-December period of current fiscal, exports fell by 6.6 per cent. Domestic consumption grew thinly by 1.4 per cent.
A hike in import duty on finished steel is likely to put a lid on the free-flowing imports from China, which has a compulsion for exports due to its huge domestic supply-demand mismatch. A huge quantity of steel is also being imported from Japan and Korea, but they are taking advantage of the free trade agreements.
At the same time, withdrawal of import duty on iron ore and coking coal would enhance their competitiveness in export markets. This will also help them in reducing their production cost and thus, protect their margins and share in the domestic market.
Domestic miners, however, will be little disappointed as their demand for a reduction in export duty on iron ore, now stands at 30 per cent, has been neglected once again.
They are, however, sent a communique to the Finance Ministry, on their own, saying that without export duty reduction, the government's thrust on reopening the mines has actually no meaning as there are no takers for inferior grade of iron ore in the country.