Budget 2022: Relief To Steel Sector in Custom Duty
by Vidhi Gada
Posted on February 05, 2022 at 10:05 AM
In her Budget statement, Finance Minister Nirmala Sitharaman said that the exemption of customs duty on steel scrap imports would be continued till March 2022. This choice may be seen as a wise move that will assist the industry not just economically, but also in terms of having a reduced carbon footprint. The decision was made to support secondary steel manufacturers in the MSME sector who have been impacted by the pandemic and increased raw material costs.
Steel Industry welcomes relief in Customs Duty this budget
Steel is a necessary product that is mostly used in infrastructure development (building and real estate) and industrial manufacture. The steel industry accounts for around 2% of India's GDP. It employs over two million people, and so the development of this industry has an impact on the Indian economy. Steel consumption decreased last year as a result of high raw material costs, weighing on the country's economy. Keeping this in mind, the Government of India decided in the Union Budget 2022-23 to prolong the exemption from customs tax on scrap imports.
Along with this, China has lately reduced its steel manufacturing. It has been withdrawing subsidies and introducing export taxes in order to discourage exports (and therefore better fulfil domestic demand) and cut carbon emissions. All of this resulted in a significant increase in steel costs both internationally and in India.
In light of these considerations, the minister stated in her Budget Speech that certain antidumping duty (ADD) and countervailing duty (CVD) on stainless steel and coated steel flat products, parts of alloy steel, and high-speed steel will be revoked in the public interest, given the current high metal prices.
Govt support to Steel Sector in Budget 2022-2023
Steel scrap is an alternative raw material in steel manufacture, used partly in blast furnaces (the basic oxygen furnace route) and completely in electric arc furnaces or induction furnaces. As a result, it may assist steel firms (particularly micro, small, and medium enterprises) in lowering their production costs as well as their carbon impact.
By extending the exemption of customs duty on steel scrap for another year, the government has been effective in deferring a greater issue and offering temporary respite.
To permanently tackle this situation, the government must guarantee that excellent quality scrap is made accessible to India's steel factories on a domestic level, and that any systematic infrastructure that has to be put in place on the ground is put in place as soon as feasible (as proposed in the Steel Scrap Recycling Policy, 2019).
It would have been great to hear from the government that, in addition to prolonging customs duty exemption, they are also taking actual initiatives to boost domestic scrap accessibility.
The latest move seems to be a push back to India's ongoing partial reliance on imported steel scrap, with no real measures in place to increase domestic scrap supply.
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