Steel Ministry seeks increase in basic customs duty to deter cheap imports

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BHUBANESWAR: The steel ministry is set to seek a sharp increase in peak rate of basic customs duty on steel products to 25% from 10%, a measure that it wants to be announced in the Budget next month to help stem the tide of cheap imports from China and, more recently, Russia. The ministry also wants sops to make exports of Goa’s low-grade iron ore feasible. It has already asked the finance ministry for an immediate increase in duty to 10% from 7.5% for flat products and to double it to 10% for long steel.

“Increasing peak rate will allow the government to change duty to meet market demands without going to Parliament,” said a ministry official, requesting not to be named. The Centre can easily meet this demand, the official said, pointing out that the World Trade Organisation’s peak import duty for steel is 40%.In the interest of domestic steelmakers, the ministry led by Narendra Singh Tomar could also ask for steel to be included in the negative list of free trade agreements with Asian countries, the official said.

A simultaneous waiver of the 2.5% import duty on raw material for steel such as coking coal, dolomite, limestone and scrap and nickel used in stainless steel is also being sought, according to industry executives. This is besides the duty waiver being sought on imported LNG that will benefit gas based steelmakers such as Essar and Wellspun.

The companies that stand to benefit could not be reached for comment. The mines ministry expects a significant improvement in domestic iron ore supplies in 2015-16, following the promulgation of an ordinance that will allow several shut mines to resume operations.

Tomar, who holds the combined charged of mines and steel ministries, had earlier told ET that the government’s first objective is to meet the domestic requirement for raw material, in line with the ‘Make in India’ programme. “In case there is surplus production then we might look at incentivising exports. In some cases such as that of low-grade iron ore fines, where there is no domestic demand, a case can be made,” the minister had said.

Relief may be in the offing for Goa’s iron ore miners. A 30% export duty is in place for iron ore although the international price of the critical steel input has crashed to its lowest in five years. Goa’s miners say they do not have a domestic market for their ore, 90% of which is of less than 58% grade FE and unused in domestic blast furnaces.

Withdrawal of the export duty is, therefore, critical to resumption of mining that was banned for two years due to regulatory issues. The mines ministry has asked the finance ministry to consider a differential duty instead of a flat 30%. This could be discussed in a meeting between the representatives of ministries along with Goa chief minister Laxmikant Parsekar.