Financial Daily from THE HINDU group of publications
Saturday, Aug 21, 2004
Excise and Customs
Industry & Economy - Steel
Government - Policy
Bid to curb inflation Import duties on steel cut
New Delhi, Aug. 20
IN a second round of fiscal measures to curb inflation, the Government on Friday announced reduction of Customs duty on non-alloy steel, melting scrap for iron and steel and ships for breaking.
Customs duty on non-alloy steel has now been reduced from the existing 10 per cent to 5 per cent. Similarly, duty on ships for breaking has also been reduced from the existing 15 per cent to 5 per cent.
The duty on scrap used for making iron and steel has been abolished. Earlier this duty was 5 per cent. Similarly, the CVD exemption has now been withdrawn on such ships and additional Customs (CVD) will now be payable on import of such ships.
The duty cuts were announced by the Minister of State for Finance, Mr S.S. Palanimanickam, in Parliament on Friday.
According to estimates, the move will result in revenue loss of around Rs 305 crore to the Government for the remaining part of the current financial year.
On Wednesday, the Government had announced reduction in Customs and excise duties for petroleum products. The revenue loss on account of reduction in Customs and excise duties on petroleum products had been estimated at around Rs 2,500 crore.
The steel industry, however, said that the move would have only a limited impact. The Indian Steel Alliance, which represents the five main primary steel producers, said that in the longer run a protection of mere 5 per cent will not suffice to protect the domestic steel industry in case the international steel prices take a downturn.
Moreover, the long-term solution lies in making more steel available to the country through growth and expansion.
It further stated that the Government should adopt long-term measures such as development and improving infrastructure, making iron ore, gas and good quality coal available and ensuring consistent supply of power to the industry.
According to the Cold Rolling Steel Manufacturers' Association (CORSMA), representing the secondary steel manufacturers, the move will do little to increase availability of steel in the country because international prices are ruling very high.
Instead, the steps aimed at curbing export of steel from India would help in raising availability of steel in the country, CORSMA said.
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