Mixed bag, no check on iron ore exports

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Consumer durable makers for lower taxesIndian steel firms to cut prices, want lower dutyFM may have a tightrope walk in Budget: FICCI

: For the steel industry, the Budget was a mixed one with some relief coming by way of duty cuts in excise, import duty on melting scrap and higher export charge on ferro chrome but disappointment coming with no measure to check export of iron ore.

Industry officials said that the finance minister should have considered the increasing in-house demand of steel in sectors such as automobile, infrastructure and construction and consumer durables. The steel industry has for long been demanding cap on iron ore exports, citing the proposed plants worth Rs 2.8 lakh crore over the next five years.

The finance minister has abolished duties on steel and aluminium scrap (from 5% earlier) and imposed higher duty on the exports of chrome ore at Rs 3,000 per metric tonne as compared to Rs 2,000 imposed in the last Budget. The country currently imports about 2.5 million tonne of steel scrap and the announcement is likely to result in savings of over Rs 200 crore for the industry.

“The reduction in import duty on steel melting scrap will marginally help offset the major cost push the industry is facing today. It was, however, expected that export duty on iron ore would be increased , which would have been good to increase the availability of the same for the steel industry,” said Vinod Mittal, MD, Ispat Industries.

Vice-chairman and MD, JSW Steel, Sajjan Jindal said, “This Budget has been made considering the upcoming general elections. The steel industry was expecting some changes in the policy with regard to iron ore exports. With iron ore prices escalating, the government should have taken some measures to make raw material available to domestic steel makers for value addition within the country”. The industry was also expecting zero duty on coke in view of over 200% price increase in coke prices over the last few months, Jindal added.

A general reduction in the excise duty from 16% to 14% and a percentage cut in central sales tax are small but a decisive step in the right direction towards a rational tax regime, said J Mehra, CEO, Essar Steel Holdings. “The government’s continued commitment towards ensuring a double digit manufacturing growth by carrying on the reform process looks reassuring, especially for infrastructure sector like steel,” Mehra said.