Budget update - Steel industry wants infrastructure status higher import duty and export tax of iron ore

Friday, 18 Feb 2011

The domestic steel industry, which raised prices in wake of some stimulus measures being withdrawn after the last budget, has warned of another price hike if stimulus is completely withdrawn in Budget 2011-12. An industry official said that “We will have no option but to pass on the burden to the consumers if excise duty concessions are withdrawn.”

1. Infrastructure status to the steel industry
The steel industry has also reiterated its long standing demand of being accorded infrastructure status. Steel firms have asked the finance ministry to grant infrastructure status to the steel industry. Such a move by the finance ministry would ensure long term funds and tax holidays for the steel industry.

A SAIL spokesperson told Business Line that “SAIL has submitted its demands and expectations from Budget 2011-12 to the finance ministry. The crux of it is that we want steel to be given infrastructure status. This would help in securing long term funds for the expansions taking place in the domestic steel industry.”

2. Hike import duty on HR coils
For the growth of industry, steel makers along with Associated Chambers of Commerce and Industry has called on the finance ministry to raise import duty on HR coils to 10% from the current 5%. ASSOCHAM in a statement said that “Pro active policy measures adopted by government of India can help extend HR coil capacity by an additional 8 million tonnes during 2011-12, making India surplus for HR coils by more than 6 million tones.”

3. Export tax on iron ore
Steelmakers have also asked the Finance Ministry to increase the export duty on iron ore. A Jindal Steel and Power Ltd spokesperson said that “Recent hikes in steel prices have been mainly driven by the increasing commodity prices. To contain this, the Government should consider increasing the export duty on iron ore.”

The government had last year raised export duty on iron ore lumps to 15%. The industry expects at least a 5% increase on the export of iron ore lumps, but it wants duty to be increased on iron ore fines as well.

An industry official that “It is time we start conserving iron ore fines as technology is coming up which will also make domestic steelmakers to use iron ore fines increasingly.”
(Sourced from BL)

Tags:Budget update, Indian steel industry, infrastructure status, higher import duty, export tax of iron ore, steelmakers, raw material, Indian government