Mixed Reactions By Steel Industry On Export Duty Hike, Import Duty Waiver

Mixed Reactions By Steel Industry On Export Duty Hike, Import Duty Waiver

Steel industry has showed mixed reactions to Government’s sops

There have been mixed reactions within the steel sector of the country after Government waived off import duty on raw materials like coking coal and ferronickel and export duty was hiked to 50 per cent on iron ore and by 15 per cent on some steel intermediaries.

While the industry has welcomed the move, saying it will lower costs and make Indian manufacturers more competitive in the global market, several companies and analysts have cautioned that overseas orders would be hit and costs could rise for millers.

Government’s decision to remove import duty on certain raw materials of steel industry will lead to lower costs for domestic steel manufacturers, with the Engineering Export Promotion Council (EEPC) saying that prices may fall by 10 per cent.

The waiving off of import duty would also help domestic manufacturers as input costs have been rising, especially that of primary steel, EEPC India chairman Mahesh Desai said, adding that it will help Indian exporters and producers become more competitive in international markets.

On May 21, Government had waived off customs duty on import of some raw materials like coking coal and ferronickel for the steel industry.

Mr Desai also said that Government’s decision to hike export duty on iron ore to 50 per cent and on some steel intermediaries by 15 per cent would increase domestic availability of key industry inputs.

At the same time though, a section of the industry felt that the imposition of export duties on steel products will send a negative signal to investors and impact capacity expansion projects under the productivity linked incentive (PLI) schemes.

Imposition of higher export tax on iron ore and various intermediate products like pellets will raise costs for steel mills, Kaustubh Chaubal, Vice President, Corporate Finance Group, Moody’s Investors Service, said on Monday.

However, strong domestic steel demand provides arbitrage opportunity for a portion of such exports to be diverted for domestic finished steel production, Mr Chaubal told Reuters over e-mail.

At the same time ArcelorMittal Nippon Steel India Ltd expects about 90,000 tonnes of steel exports every month to be hit by Government’s duty increase, alongside a dampening effect on fresh investments.

This was stated by Dilip Oommen, the company’s Chief Executive Officer (CEO), on Monday.

Meanwhile on Monday, metal stocks tanked big time, with Jindal Steel & Power cracking over 17 per cent, after the Government imposed export duties on steel-making raw materials.

Shares of Jindal Steel tumbled 17.40 per cent, JSW Steel tanked 13.20 per cent and Tata Steel plunged 12.53 per cent on the BSE.

Also, NMDC declined 12.44 per cent, SAIL (10.96 per cent), Hindalco Industries (3.65 per cent), APL Apollo Tubes (3.42 per cent) and Vedanta (2.77 per cent).

The metal index also tanked 8.33 per cent to end at 17,655.22.

Tata Steel was the biggest drag in the Sensex pack.

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