Steel export cess rolled back, 15% duty on iron ore levied

NEW DELHI: The steel industry has finally got what it has been waiting for a long time. The government on Friday notified withdrawal of recently imposed export cess on a host of steel items as was agreed earlier during a meeting of steel producers with the Prime Minister.

It went a step further by imposing a uniform 15% ad valorem export duty (duty based on value of a product) on iron ore under an additional resource mobilisation programme (ARM). The new duty structure would be implemented with immediate effect.

As per the notification, the government has withdrawn 5-15% export cess imposed on variety of steel products including hot and cold rolled coils, steel pipes and tubes and galvanised sheets. It has, however, increased export cess on long steel products such as bars and rods; angles, shapes and sections and wire from present 10% to 15% to improve their availability in the domestic market. Rising price of long products has directly impacted consumers with higher cost of construction.

It is understood that 15% export cess on pig iron has also been maintained at the same level to discourage its exports and make available the material for value addition by domestic companies.

However, the levy of 15% ad valorem duty on iron ore is significant as it has been uniformly across all categories of ore irrespective of iron content. This likely to swell government’s resources substantially as country exports roughly 100 million tonne of ore annually mainly to spot markets in China where prices have been spiralling.

Government sources said net impact of export cess withdrawal and imposition of price linked duty on ore would be a gain of Rs 2000 crore for the exchequer.

The duty changes were earlier approved by a Committee of Secretaries (CoS). The CoS was asked to arrive at solution to check the rising price of steel through a mix of fiscal and administrative measures. The proposal to levy export cess on iron ore, however, divided inter-ministerial consultation earlier with mining and commerce ministries opposing the levy while steel and finance supporting.

The cess on iron ore is a expected to act as a big disincentive for exporters of ore (mainly mining companies). “There’s no shortage of iron ore in the domestic market currently. The government’s move would only have an adverse impact on the exports of iron ore as freight and other transportation costs are already very high. The decision would also aggravate the trade deficit between India and China,” Federation of Indian Mineral Industries (FIMI) secretary general R K Sharma said.

At present export duty on a fixed rate of Rs 300 per tonne is imposed on ore with 62% of higher iron content and Rs 50 on lower grade ore.

Finance minister P Chidambaram had announced imposition of 15% export duty on hot rolled steel products, 10% on cold rolled steel products, pipes and tubes and 5% on galvanised sheets to disincentivise exports and contain the domestic demand-supply gap. The steel ministry, however, favoured its withdrawal. Steel prices have risen by about over 60% in last one year.

Essar Steel Holding CEO J Mehra, “We appreciate the government’s decision to roll back export duty on steel products as it was required to maintain long term commitments to export value added items to overseas buyers. The move will provide free market access to the industry without affecting the domestic market.”

While steel firms are maintaining a voluntary moratorium on prices, the new measures are aimed at bringing stability for a longer period.

14 Jun, 2008, 0015 hrs IST, ET Bureau

Kolkata-the future hub of auto ancilliaries.

the commisioning of small car plant at Singur will give a major boost to the demand of SPRING STEEL STRIP in the eastern region.

Like Bangalore and Gurgaon, Kolkata will become the next hub of auto ancilliaries in the coming years.

Tata is planning to make 1 million cars in this plant and hopefully Kolkata market will get a better boost in the demand of steel strips. Spring Steel Strips,Hardened Tempered Steel Strips and CRCA Steel Strips, are required in bulk quatities in the auto sector.

Hardened tempered steel strip and CRCA steel strip

 Hardened Tempered Steel strips are available in varying range of hardness, right from 28-30 HRC Rockwell on the lower side to 58-60HRC Rockwell on the higher side. These tailor made strips are manufactured out of specific requirements of customers. The basic raw material usually used is C-80 for hardness upto 52 HRC and C-98 for high hardness, i.e. above 53 HRC. This flexibility helps the end user un-necessary trouble of piece mill wise hardening. For example, in case of MRTC Knives, the end user has to take a piece of steel 1.00mm thick, then it has to be hardened and ground to .80mm. Thus it covers cost of unnecessary hardening, grinding of .20mm, increased labour cost, power and weight loss. Whereas, when the consumer can get material in Strip Form in .80 mm thickness, in 58-60 HRC hardness, then he can manufacture the material much cheaper, saving the extra cost of hardening,grinding,etc. We are a specialist in providing these types of hardened tempered strips, which are manufactured keeping in mind the exact requirement of the customer so that he can make end products in a more easier process saving a lot in production cost.

In CRCA Steel Strips also we offer the entire range in a wide variety of Grades.

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BTC-comprehensive store for steel strip

right from 4mm width to 520mm wide in Cold Rolled Steel Strip (CRCA Steel Strips)as well as Hardened Tempered Steel Strip are offered by us at the most competetive pricing.

The range is exhaustive. Thickness ranging from .025mm to 5mm and width from 4mm to 520mm in Carbon Steel, covers most of the requirement in this segment.

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strip steel demand will rise in the Kolkata market

The upcoming 1 lakh car project of the Tatas is a great lure for the market of steel strip in Eastern India, specially Kolkata.

A lot of ancialliaries would come up locally, since the car manufacturer would have to keep in mind procurement of parts at the cheapest possible rates. Thus setting up new anciallaries locally would help in reducing costs as regards transportation and keeping lower stock levels.

This will give a graeat boost to the Kolkata market. In my opinion the demand for Spring Steel Strip and Carbon  Steel strip may increase 300% after the commencement of production of the plant.

Furthur this prestigious project  of Tata, may attract a number of other  similar investments in this region. Looking to the future scenario, I expect that the eastern region will observe huge investments coming in from auto components manufacturers. So far as my study is concerned, I have also learnt that The Tatas will keep a special zone for auto ancilliaries in the said project.