Union Govt Upcoming Budget - Cut in Import Duty on Steel, Aluminium Expected
by Vidhi Gada
Posted on January 10, 2022 at 3:00 PM
India's Union Budget 2022 is just around the corner and there are a lot of expectations regarding the forthcoming budget. In anticipation that the budget will be laid down soon, a number of items are being predicted to be announced. One of such items expected is cuts in import duties of key metal elements like steel and aluminum. The sources cited that the ministry of finance and steel have reached an understanding that to help the small and medium enterprises, a reduced import duty will go a long way in reviving the industries after the nation-wide lockdown due to Covid-19.
Furthermore, the Federation of Indian Micro and Small and Medium Enterprises (FISME) proposed eliminating import duties on steel, copper, aluminium, and polymers, as well as suspending additional customs duties on the four commodities, in a pre-budget memorandum submitted to the finance ministry to keep prices in check.
Steel is currently subjected to 7.5% of import duty. On the other, aluminium, copper and polymers are all under 10% of basic customs duty. Additionally, all the products attract 18% of integrated goods and services tax to counteract all the local taxes. It is now predicted by people that the duties will be brought down further with metal and allied products getting full exemption.
The post-covid scenario has affected economic activity greatly. The domestic steel prices have been greatly increased after the national lockdown was lifted. The global impact of increasing iron ore prices has led the steel prices to go further high. Since, these industries are highly interconnected which resulted in hot-rolled coil prices to reach upto Rs. 58,000/- per to Rs. 72,000/- in the present times. These constant high and low prices of the industry have now struck user industries in difficulty.
Finance Minister Nirmala Sitharaman had previously removed anti-dumping and countervailing duties on specific steel goods in this year's budget, while lowering customs tax uniformly to 7.5 percent on semis, flats, and long products of non-alloy, alloy, and stainless steels from 10-12.5 percent before.
She also reduced the import fee on steel scrap to zero to help user industries who have been impacted hard by the significant surge in steel prices. The budget for the fiscal year that begins on April 1 is projected to reduce duties even further to help small and medium businesses gain momentum in the economy.
While small and medium-sized businesses desire tax reductions, metal producers urge the government to hike taxes, notably on aluminium, to prevent India from becoming a dumping ground for global manufacturers with excess inventory. The government has to lay down a policy to maintain balance so that either of the parties don’t face extremes.