Stocks of steelmakers from the likes of Tata Steel, JSW Steel and SAIL jumped on Monday after sources said the government is considering a proposal to discontinue a 15 percent export duty on certain steel products.
Tata Steel, JSW Steel, JSPL and Steel Authority of India Ltd (SAIL) jumped around 3-5 percent in afternoon deals.
The government will consider the industry's proposal to discontinue the 15 duty on exports of certain products before the end of the monsoon season, sources told CNBC-TV18.
A decision is yet to be taken on the exemption of export duty for steel, they added.
The Finance Minister had recently assured industry leaders, following a meeting with Tata Steel, SAIL, JSW Steel, JSPL and ArcelorMittal, that the government will relook on the duty on certain products.
Major steelmakers have lost market capitalisation as margins were under pressure amid slow domestic demand and high export duties resulting in a loss of overseas customers.
In a bid to tackle soaring inflation, the government had imposed 15 percent export duty on steel on May 22 which had sent steel stocks into a downward spiral and triggered earnings downgrades for the sector.
Despite the uptrend in share price of steelmakers, it is “too premature and early for the govt to relook at the export duty,” Rakesh Arora, Founder of goindiastocks.com, told CNBC.
“I don't see any case for export taxes to be revoked… even if the export duty is removed, which is highly unlikely, the impact on domestic prices is likely to be like negligible. In fact, today, the import parity price is Rs 2,000-3,000 per tonne lower than the domestic price. So, even if you reduce the export duty to zero, domestic prices will still have to fall because imports can come in, given that global prices are much lower,” Arora added.
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