Union Finance Minister Nirmala Sitharaman has come to the rescue of iron and steel users in the country by proposing to reduce import duty on these commodities and suspending other levies on them.
The proposal comes at a time when steel users have bitterly complained against the recent hikes, resulting in prices rising by over 40 percent since June last year.
Union Minister for Road Transport and Highways Nitin Gadkari had criticised the sharp spike in steel prices, saying it would affect infrastructure development in the country as costs of infrastructure projects could increase.
The steel producers had defended the hike, pointing to the surge in global iron prices on huge Chinese purchases. Iron ore prices had increased to 10-year highs in mid-January 2021. Prices have declined since then, mainly since they dropped 6.5 percent last week in the global market.
Nevertheless, Sitharaman has taken a different view on the issue, saying micro, small and medium enterprises (MSMEs) have been severely affected by the sharp rise in iron and steel prices.
“We are reducing Customs duty uniformly to 7.5 percent on semis, flat, and long products of non-alloy, alloy, and stainless steels. To provide relief to metal recyclers, mostly MSMEs, I am exempting duty on steel scrap for a period up to March 31, 2022,” she said presenting her Budget proposals in Parliament.
Further, she has revoked the anti-dumping and countervailing duties on certain steel products until September 30, 2021.
She has also proposed to cut duty on copper scrap imports by 2.5 percentage points to five percent to help copper recyclers.
The finance minister has also attempted to help the spinning and weaving sectors in the textile industry by proposing the lowering of customs duty on caprolactam, nylon chips, nylon fibre and yarn.
Sitharaman has proposed a five percent duty on these products against 7.5 percent now.
Textile spinners and weavers have been under tremendous pressure as the price of yarn from man-made fibres has increased by over Rs 30 a kg in the past few weeks with some domestic producers enjoying the benefits.
In the case of steel, the finance minister has proposed zero duty for import of iron and steel scrap, including stainless steel, from 2.5 percent. A similar levy has been proposed for imports of cold-rolled grain-oriented steel.
Duty cut proposed for primary and semi-fines non-alloy steel, flat products of non-alloy and long products of non-alloy, stainless and alloy steel is 7.5 percent from 10 percent. In the case of flat products alloy steel, the reduction proposed is 7.5 percent from 12.5 percent.
All these products will, however, attract 2.5 percent Agriculture Infrastructure and Development Cess.
The Budget document said the Union government proposed to suspend till September 30, 2021, the anti-dumping duty on straight length bars and rods of alloy steel from China. The anti-dumping duty was imposed on October 18, 2018.
Anti-dumping duty on high-speed steel of non-cobalt Grade from Brazil, China and Germany imposed since May 25, 2019, was also proposed to be suspended.
Similarly, anti-dumping duty on flat-rolled products of steel, plated or coated with alloy of aluminium or zinc from China, Vietnam and South Korea imposed from June 23, 2020, was proposed to be temporarily revoked.
The proposal also included revoking temporarily countervailing duty on certain hot-rolled and cold-rolled stainless steel flat products from China imposed from September 7, 2017.
It also suggested suspending provisional countervailing duty on flat products of stainless steel from Indonesia imposed from October 9, 2020.
(Subramani Ra Mancombu is a journalist based in Chennai, who writes on topics in commodities and agriculture)
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