Budget 2016 expectations: Higher import duty on steel products a must

Published: February 26, 2016 5:34:34 PM

Budget 2016 expectations: Drop in steel demand from China coupled with excess production capacity has impacted steel manufacturers worldwide. Additionally, Indian manufacturers are facing a hostile import scenario, with rise in cheap imports from South Korea, Japan, and China.

Budget 2016 expectations: Drop in steel demand from China coupled with excess production capacity has impacted steel manufacturers worldwide. Additionally, Indian manufacturers are facing a hostile import scenario, with rise in cheap imports from South Korea, Japan, and China.

To provide temporary respite from imports, the Government has increased Minimum Import Price (MIP) on steel. MIP is imposed on 173 steel products, ranging from US$ 341– US$ 752 per ton. New MIP rates would be applicable for a period of 6 months from the date of notification (5 February 2016).

In the upcoming Union Budget, steel manufacturers are expecting measures to protect the domestic industry from imports. This could range from hike in import duties on steel products, to reduction in customs duty on key input materials used in steel manufacturing.

Budget 2016 Expectations:
·     Higher import duty on steel products, particularly long and flat steel products: Flat and long steel products are some of the largest imported steel products to India. Government, in its upcoming budget is expected to hike import duty on these products.
·     Reduction in import duty on iron ore imports: Iron ore production in India declined from 218 Mn tonnes in FY10 to 125 Mn tonnes in FY15. The shortfall is normally met through imports. A reduction in the import duty is expected which will help to reduce cost of production.
·     Reduction in import duty on coking coal: Coking coal is a key input in steel manufacturing and in the absence of domestic resources, steel manufacturers resort to imports for their coking coal needs. A reduction in the import duty is expected which will help to control the input costs.
By Dr Arun Singh – Senior Economist – Dun & Bradstreet India

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