With a view to bring relief to the domestic steelmakers, the finance ministry is likely to impose a 10% import duty on flat steel products
(hot- and cold-rolled coils) shortly. The ministry, which is likely to announce a new fiscal package for the steel sector next week, may also re-impose 14% countervailing duty (CVD) on bars and structurals (primarily for steel) and withdraw export duty on steel products that were left out from duty waiver earlier.
“The steel ministry submitted a new fiscal package for approval to the finance minister (FM) on Friday. Though the FM has given an assurance of full support to the steel ministry, the decision on duty rejig may be announced once Prime Minister Manmohan Singh returns from Beijing,” an official source said.
While the finmin is likely to change custom duty structure on steel, it is unlikely to reduce excise duty on the metal as suggested by the steel industry earlier. The industry had earlier asked steel ministry to reduce excise duty on steel products from present 14% to 8% level. Long steel products used for construction activities may also escape the 10% import duty. However, the CVD (14%) waiver on few long products may be withdrawn to create a level playing field.
The new fiscal package is likely to come as a breather for steelmakers including Tata Steel, JSW, Essar and Ispat who have been finding it difficult to sell their products in the domestic market due to the suppressed demand and cheap imports coming from countries like Ukraine, Thailand and China. The landed cost of steel from these countries has reached rock bottom level of between $500 -$600 per tonne, much lower than prevailing domestic steel price.
The steel industry had demanded import duty up to 15% on steel products besides fixing a floor price of $800 per tonne on imports to prevent dumping from China, Ukraine and Thailand.