In a bid to contain runaway steel prices in the domestic market, which have gone up by over 50 percent in some cases, the government has reduced import duties on a host of items. Further, safeguard measures like anti dumping and countervailing duties have been revoked on some products including those from China.
Prices of key raw materials including steel have gone up as strong demand from China at a time when most countries were under a shutdown last year created an acute demand supply gap. In the bargain however, consumer facing industries and intermediary small and medium enterprises have faced the brunt unable to pass on the cost to their end user.
"MSMEs and other user industries have been severely hit by a recent sharp rise in iron and steel prices. Therefore, we are reducing Customs duty uniformly to 7.5% on semis, flat, and long products of non-alloy, alloy, and stainless steels," said finance minister Nirmala Sitharaman during her budget speech on Monday. "To provide relief to metal re-cyclers, mostly MSMEs, I am exempting duty on steel scrap for a period up to 31st March, 2022. Further, I am also revoking ADD and CVD on certain steel products. Also, to provide relief to copper recyclers, I am reducing duty on copper scrap from 5% to 2.5%."
The measures are multiple and cover a wide range of steel products. Customs duty on iron and steel melting scrap, including stainless steel scrap has been removed entirely upto March 31, 2022 while on primary/semi-finished products of nonalloy steel and on long products of non-alloy, stainless and alloy steel, it has been reduced from 10% to 7.5%. Duty on raw material used in manufacture of cold rolled grain oriented steel has also been entirely removed while import duty on copper scrap has been halved to 2.5%.
Further, some of the trade remedial measures on a host of steel grades which were imposed between 2016 and 2019 to combat dumping of the commodity into the country have been revoked. They also include steel from China. Anti dumping duty has been revoked till September 30, 2021 on straight length bars and rods of alloy-steel, originating or exported from China, high speed steel of non-cobalt grade, originating or exported from Brazil, China and Germany, and flat rolled product of steel, plated or coated with alloy of aluminium or zinc, originating or exported from China, Vietnam and Korea.
Similarly countervailing duty has also been revoked till September end on certain hot and cold rolled stainless steel products from China and provisional countervailing duty has been revoked for the same period on import of flat products of stainless steel from Indonesia. As part of a sunset review of anti-dumping duty on Cold-Rolled Flat Products of Stainless Steel of width 600 mm to 1250 mm and above 1250 mm of non bonafide usage originating or exported from China, South Korea, European Union, South Africa, Taiwan, Thailand and United States of America has also been discontinued.
These measures have brought some cheer to companies that rely on steel as a key input product.
"The exemption duty on steel and copper scrap, up to March 2022, will help control the rise in price of consumer goods that will translate into healthy sales in the coming summer season," said Dinesh Chhabra, CEO, Usha International.
"The announcements made for the steel sector in the Budget are largely around making steel available in the right quality and quantity at competitive prices to enable speedy infrastructural development planned for the country," said Saurabh Bhatnagar, Partner and National Leader, Metals & Mining, EY India. "Reduction in customs and anti-dumping duty on steel imports and zero customs duty on scrap imports will benefit the secondary steel manufacturers to supply steel for construction of roads, ports and bridges and add to a more cost effective supply base for steel."