Scrapping of export taxes to aid steel industry’s growth: Scindia | The Financial Express

Scrapping of export taxes to aid steel industry’s growth: Scindia

After so many years, Indian steel industry has been able to enlarge its footprint globally and therefore it was “our (government) job to provide a fillip” to the industry, Scindia added.

Scrapping of export taxes to aid steel industry’s growth: Scindia
The decision was taken very judiciously after taking all stakeholders' concerns into account, he added. (IE)

Withdrawal of export taxes on various steel products could herald a new era of growth for the domestic steel industry, which has already gained a footprint internationally, Union minister Jyotiraditya Scindia said on Monday.

The government has cut the export duty on steel products and iron ore to nil with effect from November 19, 2022, six months after imposition of the levy on May 21 this year. Following that, concerns were expressed by steelmakers that while domestic demand has remained muted in recent months, companies are losing out overseas customers due to the export taxes.

Moving in to rein in input prices and control runaway inflation, the government in May this year imposed an export duty of 15% on select pig iron, flat-rolled products of iron or non-alloyed steel, bars and rods and various flat-rolled products of stainless steel and another 45% on iron ore pellet. Similarly, the export duty on iron ores and concentrates was raised to 50% from 30%.

“It has taken if not months then years for our industry to be able to to firmly plant its footprint internationally… (On) steel product, the duty has been removed completely from Friday evening enabling a new era for the steel industry to grow,” the minister said, at the 3rd Indian Steel Association (ISA) conference here.

The decision was taken very judiciously after taking all stakeholders’ concerns into account, he added.

There were several rounds of discussions with the advisory committees on integrated steel plants (ISP) and secondary sector players who were of the view that the duty should be removed.

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“Finally we came up with the judicious reasoned argument with which I approached both group of ministers and finance ministry, and I promised industry that we will take clear cut opinion certainly by November,” he said.

After so many years, Indian steel industry has been able to enlarge its footprint globally and therefore it was “our (government) job to provide a fillip” to the industry, Scindia added. He said that India will be making steel not only for domestic consumption but for global needs as well.

According to an Icra report, the 15% duty covered products that accounted for 95% of the country’s finished steel exports in the last two fiscals. It rendered exports significantly less attractive, and in turn, exerting pressure on domestic steel prices and industry capacity utilisation levels.The average monthly price of hot-rolled coil (HRC) – a benchmark for flat steel – eased since the imposition of the taxes, adversely affecting the profitability of primary steelmakers.

While the impost was aimed at curbing rising prices of the alloy and boost its availability and consumption in the local market, all primary steelmakers felt the government’s decision is “ill-timed,” as “steel prices were already correcting.”

(With PTI inputs)

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First published on: 22-11-2022 at 03:30 IST